A frantic Friday.
AIG says it is hiring JP Morgan Chase to advise it on raising new capital or devising a deal that infuses the insurer with enough funds to prevent a downgrade by ratings agencies, Charlie Gasparino reports. A plan could be announced this weekend, say two sources with "direct knowledge" of AIG's efforts.
Seeking reinforcements, AIG is also working with BlackRock in its drive to raise capital or otherwise bolster its balance sheet. The firm might also sell assets, Gasparino says.
AIG CEO Bob Willumstad has been planning to announce a major reorganization of the firm on September 25, but suddenly, developments have overtaken that schedule and a revamp seems imminent.
For Lehman Brothers , the race against time goes on; the firm seeks to sell itself before the end of the weekend as the bad debt on its books unsettles investors.
What You Were Reading:
Washington Mutual, America's biggest savings-and-loan, is also in desperate need of a buyer. Moody's Investors Service cuts WaMu's credit rating to "junk'' status. CNBC reports that JP Morgan is interested in buying a piece of WaMu, but that the two firms are not yet in advanced talks. (JPMorgan Chase will end up acquiring WaMu en toto.)
Shares of financials in general slip Friday; and the scariest tumbles are suffered by Lehman, WaMu and AIG. The insurance giant's shares plummet some 30 percent amid downgrade worries.
The Dow, S&P and Nasdaq close the day flat, partly because traders bid up General Motors in the belief that the auto sector will be the next to be bailed out.
Crude oil prices dip below $100 a barrel before settling at $101.18 amid concerns about Hurricane Ike, barreling toward the Texas Gulf Coast. Oil has shed $5 a barrel this week, its second straight week of decline. Crude is now off about 30 percent from its record close of $145.29 on July 3.
What the Experts Were Saying:
Mohamed El-Erian, Pimco co-CEO & CIO discusses Lehman Brothers' weekend of destiny with Maria Bartiromo.
Should the Fed rescue Lehman if no deal is reached? Sen. Richard Shelby (R-Ala.) isn't so sure.
What if Lehman isn't saved or acquired? David Kotok, Cumberland Advisors chairman and CIO, outlines the risk to the financial system.
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