Nikkei down 565 so far, S&P, Moody's cut AIG rating, threatening rescue

[swag]

bigger trouble

Sept. 15 (Bloomberg) -- American International Group Inc.'s credit ratings were downgraded by Standard & Poor's and Moody's Investors Service, threatening efforts to raise emergency funds to keep the company afloat.

The ratings downgrades occurred after two people familiar with the situation said that the biggest U.S. insurer by assets is seeking $70 billion to $75 billion in loans arranged by Goldman Sachs Group Inc. and JPMorgan Chase & Co. to replenish capital.

AIG Chief Executive Officer Robert Willumstad has tried to raise cash to forestall debt-rating downgrades that could hobble the insurer. A ratings cut may have ``a material adverse effect on AIG's liquidity'' and trigger more than $13 billion in collateral calls from debt investors who bought swaps, the insurer said in an Aug. 6 filing.

Wall Street's biggest firms convened at the New York Fed for a fourth consecutive day, this time to discuss AIG, which sold the banks and other investors protection on $441 billion of fixed-income assets, including $57.8 billion in securities tied to subprime mortgages. AIG's shares plunged 61 percent today in New York trading.

``I don't know of a major bank that doesn't have some significant exposure to AIG,'' said Kenneth Lewis, chief executive officer of Bank of America Corp., in a CNBC interview. An AIG collapse would ``be a much bigger problem than most that we've looked at.''

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[thewiseguy]

1. Nikkei is down 650 points...The AIG situation is catastrophic

They need to find a way to save this company. If AIG goes down then we are all screwed.

[opihimoimoi]

2. Smells like the incipient stage of a MAJOR SHIFT.....DOWN...

The fragile Infrastructure of our Financial World is going through a correction...called cutting the deadwood and its causes ..

In 8 years, this MBA Bush and his neocon pnacers have taken a strong Nation and reduced it to its knees...all the while telling us its OK...all is well.

Its quite obvious, judging by our dire straits, the GOP and its stooges have underestimated the effects of their decisions....the unintended consequences syndrome has hit the FAN...

[Fenris]

3. Not good. Not good at all.

More pain likely to come before this settles. It's certainly one way to reorganize Wall Street. Thanks be to Invisible Hand!

[TexasObserver]

4. AIG will pull down many businesses, too