Stocks Remain Flat After Monday Crash

September 16, 2008 12:00:00 AM PDT
With two financial giants essentially up in smoke, prompting the worst day of trading since the initial days after the September 11th attacks, there is another fire to put out and considerable uncertainty amidst the wreckage on Wall Street. David Wyss Chief Economist, Standard and Poor said, "This just increases the fears that somebody else is next in line. You've got AIG (America International Group) sitting there. You've got WAMU (Washington Mutual) sitting there. There's a lot of other candidates for the next person to take a fall."

After the buyout of Merrill Lynch, and the bankruptcy of Lehman Brothers, all eyes have shifted to American International Group. AIG is the country's largest insurance company, and the problem is they back many of the mortgages fueling the housing crisis.

"If there's a company that seems too big to outright fail AIG would probably qualify," said Mike Santoli, Associate Editor of Barron's.

With 100,000 employees and 17 million customers, AIG tumbled 60 percent Monday to its lowest stock price ever. "There's a remote chance that if AIG went down entirely in other words there's zero value for anybody; yes, the insurance policy goes down," said Santoli.

Aiming to avoid a market meltdown the Federal Reserve pumped $70 billion dollars into the nation's financial system Tuesday to help ease credit fears.

Meantime negotiations are still underway to sell portions of Lehmans to British Bank Barclays.

One of the two remaining major investment banks still standing, Goldman Sachs announced today that its third-quarter profit plunged 71 percent, though still better than some analysts expected.


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