Posted by: Ben Steverman on August 11, 2008
What will the credit crisis look like on its second anniversary? BW colleague Will Andrews offers his tongue-in-cheek predictions:
After another orgy of writedowns and a Niagara of red ink among U.S. financial firms (in which Lehman Brothers (LEH) accidentally wrote down the same assets twice), Fed chairman Ben Bernanke executed one final bold plan to shore up the U.S. banking system. The Fed chief arranged for the consolidation of the remaining big U.S. financial firms into two new entities: GoldmanBofAMerrillCiti and JPMorganStanleyBrothers.
Under terms of the deals, which were consummated at a weekend swap meet in Pavonia, N.J., Goldman (GS) and JPMorgan were the nominal acquirers of the other firms, but it was the Fed that provided the financial muscle. The central bank opened its (that is to say, your) pocketbook to the tune of $200 billion in YYMAPTB (Yes, You Must Absolutely Pay This Back) and STTWBOTH (Seriously, the Taxpayer Won’t Be on the Hook) term facilities.
OK, I won’t give away all the jokes. Assuming you’re not too nervous to laugh at our financial system’s bleak outlook, check out Will’s Subprime City Confidential for the whole thing.