By Edith Orenstein, FEI Financial Reporting Blog - No, this isn’t about some rock band, but about the potential fallout from the failures, rescues, failed rescues, and everything in between, that rose to a crescendo in the past six months – particularly in the past ten days – with respect to the financial markets. (By the way, I don’t mean to be sexist by saying ‘Fallout Boys,’ FEI is hosting its “Women in Financial Leadership” conference today in NYC, and clearly women will be impacted in every aspect of this crisis.)
Beginning with the government assisted takeover of Bear Stearns by JP Morgan Chase in the spring, and continuing with the FHFA’s takeover (technically, conservatorship of) Fannie Mae and Freddie Mac earlier this month, followed by the bankruptcy filing of Lehman Brothers earlier this week (not to mention the purchase of Merrill Lynch by Bank of America), and now, the $85 billion secured lending facility offered by the Fed to AIG, the situation seems to have deteriorated. Announcing the AIG loan agreement last night, the Fed said its action was taken “with the full support of the Treasury Department,” and that “The [Federal Reserve] Board determined that, in current circumstances, a disorderly failure of AIG could add to already significant levels of financial market fragility and lead to substantially higher borrowing costs, reduced household wealth, and materially weaker economic performance.” In light of the turmoil in the markets, Members of Congress, Presidential candidates, and others are asking for answers (or at least, explanations). Read more here.