*Insurer American International Group Inc. seeks $40 billion in short-term financing from the Federal Reserve. *Lehman Brothers Holdings Inc. said it plans to file for bankruptcy protection. The bankruptcy represents the end of a 158-year old company that survived world wars and the collapse of long-term capital management but could not survive the global credit crunch. *Bank of America agreed to buy investment bank Merrill Lynch for $50 billion in a transaction that creates the world's largest financial services company. *World markets plunged Monday on fresh fears over the state of the global financial system as Wall Street giant Lehman Brothers said it would file for bankruptcy.
*The US Federal Reserve Board said the Federal Reserve Bank of New York will lend up to $85 billion to the American International Group (AIG), in a plan aimed at saving the insurer from a "disorderly failure" that could damage the global economy. *Barclays said Wednesday it had reached a deal to acquire the North American investment banking and capital markets businesses of stressed US investment giant Lehman Brothers for $1.75 billion.
*The Federal Reserve approved applications on Sunday from Goldman Sachs and Morgan Stanley to become bank holding companies, putting them directly under the regulatory supervision of the US central bank, the latest step to restore calm to chaotic financial markets.
Update of July 21, 2008: So why did Richard Holbrooke resign last week from AIG's board? AIG while announcing the resignation, "effective immediately," did not list a reason...
*US President George W Bush and Treasury Secretary Henry Paulson present before Congress a $700-billion bailout plan to rescue the troubled US financial sector.
*AIG signs "definitive" $85-billion deal with US Federal Reserve *So with its $85 billion bailout of AIG, the Federal Reserve will come to run a predatory lending operation.