Re: [Pen-l] Re: financial melt-down

[Dan Scanlan <coolhanduke1029@xxxxxxxxxxxxx>]

On Sep 18, 2008, at 2:40 PM, Jim Devine wrote:
> (1) they start creating problems for the financial system, as AIG did
> even though it wasn't a "bank"; and

Doesn't AIG "insure" a bank's "line of credit" rather than the assets  
themselves?

I think the reason WAMU is in trouble is because it has more than  
15,000 homes on its assets list...homes they had to recall when the  
loans didn't work, homes they don't want and that don't add to their  
capitalization. Their line of credit is shot. It's not that WAMU  
doesn't have money. They do; but it belongs to their depositors. AIG  
got in trouble because it backed the function (which is fraudulent to  
begin with, I believe).

I'm parroting here what I was told by a friend in the banking industry  
who works for a bank that narrowly (and happily) escaped being bought  
out by AIG a few years ago. I'm interested in knowing if this analysis  
bears water or not.

My friend attended the annual convention of mortgage lenders in Las  
Vegas this week. He said the convention normally is crowded but that  
one could shoot a cannonball across the main hall at this one and not  
hit anyone. Dismal, says he.

Dan


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