To say this has been a wild ride for finance stocks, would be a huge understatement. Lehman Brothers, Merrill Lynch, and now AIG being rescued by the federal government for 85 billion dollars. The U.S. government through this bailout shows that AIG is too big to fail. What does this mean? Why can’t it fail? Well, apparently if AIG were to go out of business the financial impact would be felt from airline companies to life insurance recipients. AIG insures large and small businesses and the domino effect would be detrimental to the global economy. It should also be noted that AIG is a Dow 30 stock and held by thousands of individual and institutional investors. If you own a mutual fund, your portfolio manager might hold AIG stock. Well, the question of who’s next comes to mind. What made AIG unique from other insurance companies? Apparently they had similar exposure to investments tied to home foreclosures. What other U.S. companies are too big to fail? Do you agree? Should government be laissez faire or “hands off” with companies and allow them to fail?
Here’s a quick list of several U.S. global companies that may be too big to fail:
1. General Electric (GE)
2. American Express (AXP)
3. JPMorgan Chase (JPM)
4. General Motors (GM)
5. Ford (F)
6. Citigroup (C)
7. Washington Mutual (WM)
8. Wachovia (WB)
9. Bank of America (BAC)
10. ???? What would you add to this list?
