AIG taps additional reserves from the Federal Reserve

AIG, America's largest insurer, announced it is borrowing more funds from the Fed. "They need more liquidity than they thought" remarked an analyst at William Blair & Co. The money will go towards helping AIG cover requests from clients to redeem borrowed securities.

But can AIG be trusted with the bailout money?

Days after the bailout it was reported AIG spent $440,000 on a California retreat involving banquets, spa treatments and golf.

These expenses are being subjected to some hard-nosed analysis by New York Attorney General Andrew Cuomo (the function of the Attorney General is to act as the chief legal officer of the State, protecting consumers, investors and businesses throughout the state). In addition, $19m in payments to former AIG chief executive, Martin Sullivan, have been frozen as AIG plays ball with the investigations - which will also review executive compensation.

UK Banking Sector Part-Nationalised (£35-50 billion cost)

UK PM Gordon Brown orders taxpayer-backed cash injection, following meeting with Bank of England governor Mervyn King. Estimated cost £35-50 billion. Shares in RBS tumbled 39%. More to follow.

Metro runs a story on Dick Fuld - "Grilling for Gorilla of Greed".

"When the company did well. we did well...When the company did not do well, Sir, we did not do well" stated Mr Fuld.

Dick Fuld in the Dock - "Gorilla of Greed" or "Innocent Victim of the Credit Crunch"? You Decide.

Dick Fuld, the man who joined Lehman Brothers in 1969, and rose to become Wall Street's longest serving CEO was in the dock today.

A PRIMER on United States Politics

The United States CONGRESS is divided into two houses:

1. The United States SENATE (upper house)
2. The House of REPRESENTATIVES (lower house)

POWERS and constitution of the Senate and the House are governed by ARTICE ONE of the constitution (covers LEGISLATION, aka STATUTORY LAW).

Each STATE is represented by TWO SENATORS regardless of population. The current PRESIDENT OF THE SENATE is Richard Cheney (REPUBLICAN).

The Speaker of the House of Representatives is Nancy Pelosi (DEMOCRAT).

The name AMERICA is believed to have been coined after ITALIAN explorer AMERIGO VESPUCCI. The full name of the country was first used officially in the DECLARATION OF INDEPENDENCE (July 4 1776, the year was famous for the AMERICAN REVOLUTION).

UK FSA to guarantee bank deposits up to £50K, Wells Fargo buys Wachovia, Ken Lewis attacks "Typical Wall Street pay", Bailout is Passed -Will it Work?

Up from £35K guarantee. An important point identified by the BBC: "At the moment, customers are only covered for one account under each banking licence so if you have two accounts with banks that are owned by the same parent company you will only have a total of £50,000 guaranteed". Joint accounts are covered for double.

Payments are made through the Financial Services Compensation Scheme (FSCS). Banks outside EU are also covered since they contribute to the scheme as well.

US bank Wells Fargo will buy rival Wachovia in a $15.1bn (£8.5bn) deal, spoiling an earlier proposal for a Wachovia-Citigroup takeover.

On the recent $50bn BoA-Merrill deal, Ken Lewis commented on the future for Merrill's. "Merrill was paying typical Wall Street pay. Their staff people were making a lot more than our staff people. That won't last. We intend to pay market instead."

The most historical intervention of the US government in the economy since the Great Depression happened today as the Senate-amended bailout is passed. FedReserve Chairman Ben Bernanke said he welcomed the news. Could this be the start of the end of the worst financial storm since 1929?

Manufacturing Slump in UK, Buffett reiterates "economic Pearl Harbour", Irish Bank Guarantees Passed into Law, GLG estimates $95m exposure to LBIE

The Times reports Ford is running four-day week until Christmas at its Transit van plant in Southampton, similarly Land Rover at its plant in Solihull. Good for work-life balance. 

Warren Buffet reiterated his stance on the credit crisis and proposed bailout - "it is an economic pearl harbour" adding "perfectly credit-worthy companies can't obtain funds...the commercial paper market has been very tough...money market funds...$175bn poured out in 3 days...the credit-markets totally have seized up, we very much need a bill". On the current crisis and the circumstances that led up to it he commented: "we have the whole world trying to deleverage...everybody leveraged up and you could get all the money you needed and anytime there was a spread between borrowing costs and what you thought an asset would bring, everybody was tempted to reach for it, now you got everyone trying to deleverage" adding that the only "countervailing force" with the capacity to leverage up and counteract the crisis was the US government. The FT reports - "Ireland’s decision to prop up its six biggest lenders by guaranteeing all their debts and deposits as passed into law on Thursday". Gordon Brown, concerned about outflows of money to Irish institutions, raised concerns with Irish PM Brian Cowen. We haven't heard much on the impact of the credit crisis on hedge funds. One exception is GLG Partners, Inc, an alternative asset manager, which sent an update to investors detailing exposure to Lehman Brothers International (Europe) ("LBIE"). The letter read - "In total, we currently estimate that the combined direct exposure of the GLG Funds to be approximately $95 million, or less than 1% of GLG's net AUM." GLGs four founders worked at Lehman Brothers and Lehman had a 20% stake in the firm.

Bailout Approved by Senate, Buffet puts $3bn into GE

Late Wednesday night the Senate voted in favour of the bailout (74 votes to 25).

Berkshire Hathaway invested $3bn in preferred stock of GE, whose shares have slid about one-third this year. Eight days previous Berkshire put in $5bn into GS in a similar deal.