Should we feel sorry for (investment) bankers?

[Phube]

Part 1 - Dispatches: How the Banks Bet Your Money

Find the rest yourselves!

[James.]

What do you think the implications will be if AIG can't raise the finance? Am I right in thinking they're the largest insurer of the banks for securities defaults? Obviously the Fed cannot stand by and let it go into admin but what's the mood amongst the city on this?

The consequences of AIG collapsing are pretty catastrophic to be honest. AIG has insured over $440 billion of corporate debt and mortgages currently held on many European investment banks balance sheets. If they go under then all of a sudden a lot of financial institutions no longer have credit protection on their loan portfolios which starts a whole new round of write downs and capital raising.

If sovereign wealth funds and other organisations don't show the same appetite for cash injections that they did when UBS, Citi, etc looked for external investment then all of a sudden there will be a lot of investment banks looking very vulnerable (more so than now).

The mood in the City is basically a function of whatever the latest news from AIG is. If the Fed provide the liquidity the company needs then the markets will rally through relief. If not then it gets very messy.

[shen]

What do you think the implications will be if AIG can't raise the finance? Am I right in thinking they're the largest insurer of the banks for securities defaults? Obviously the Fed cannot stand by and let it go into admin but what's the mood amongst the city on this?

Well they've just stated that the interest rate will stay the same...

[James.]

Well they've just stated that the interest rate will stay the same...

The Fed have taken a much tougher stance over the recent problems. Not bailing out Lehman and keeping the Fed Funds Rate the same at 2% (when some were looking for a 0.5% cut) shows they won't cave in to market pressure.

However there's serious systemic implications of letting AIG collapse and I'd be very surprised (and concerned) if some sort of rescue package wasn't agreed in the next couple of days.

On a side note guess who insures the rental payments on the Lehman building at Canary Wharf? Yep, it's AIG.

[Daggers]

I blame investment bankers for our shite display on Saturday.

And the crap policing.

And 'Girl Power'.

[DJ Barry Hammond]

I don't think there is any finacial services company that can class themselves as 'safe' at the moment, each company is feeling un-easy about the situation and will be tightening their belts accordingly.

I moved to AXA from Britannia recently because I couldn't stand Britannia - the way it's run is a joke. (If you have more than a safe amount invested with them I would consider moving it.) But one of my concerns now is hearing that AIG one of if not the biggest insurance company suffering.

I gave up 7 years of service in attempt to get better prospects, a little more money and a happier place of work - but if i'm laid off, I'll get nothing.

End of the day - whether you feel sorry for these guys or not, you'll still feel the consequences of these goings on in your wallet at the end of the month.