Deal summary:

• Congress approved an unprecedented $700 billion government bailout of the battered financial industry on Friday and sent it to President Bush for his certain signature.
  
• The final vote, 263-171 in the House, a comfortable margin that was 58 more votes than it garnered on Monday.
  
• Bush was poised to make a statement on the historic vote.

IS THE PACKAGE TOO LATE AND TOO "SMALL" NOW?

Charlie Rose Interview with Warren Buffett on Wed, Oct 1, 2008

Source: Charlie Rose

List of failed banks keeps growing. Failed banks' size and geographical footprint do not seem to matter. If there is no bailout or some kind of package from government to help distressed financial companies, the list most likely will be much longer later. Unfortunately, FDIC currently does not have enough money to cover all the 'FDIC-insured' accounts which means with or without $700 billion bailout, if there are more failed banks that FDIC need to take over, FDIC will need huge capital injection from US Government that will certainly cost tax-payers' money. Read more to see the detail list as of Sep 25, 2008.

Our regulators today have disappointed many people. Most people I talked to were surprised with the decision NOT to pass the $700 billion package. Most people who originally opposed the idea, now start to rethink their positions again after watching the market dropped precipitously (today, Dow dropped 777...a good number if it were a positive one). The notion that "What happens on Wall Street stays on Wall Street" is completely baseless. In fact, I propose a modified yet more realistic statement: "What happens on Wall Street stays on both Wall Street and Main Street."

"Only when the tide goes out do you discover who's been swimming naked." ~ Warren Buffett

BREAKING NEWS: The US Government's Federal Deposit Insurance Corp. (FDIC) seized WaMu on Thursday, Sep 26, 2008, and then sold the thrift's banking assets to JPMorgan Chase & Co. for $1.9 billion. Seattle-based WaMu, which was founded in 1889, is the largest bank to fail by far in the country's history. The shotgun acquisition brokered by U.S. Government of assets, deposits and certain liabilities of Washington Mutual’s banks by JPMorgan Chase will leave existing Washington Mutual Inc. (Holding Company)'s common and preferred shareholders with nothing. Here are the key terms of the deal. 

Financial Meltdown Drama Continues: AIG got $85 Billion bail-out package from US Government.

During this extremely volatile market, investors need to be extremely prudent:

THIS RECENT DEVELOPMENT ON WALL STREET TODAY SUNDAY, SEP 14, 2008, IS UNPRECEDENTED IN BOTH SCALE AND SPEED:

• According to CNBC, today, Sunday Sep 14, 2008, Merrill Lynch, the world's largest brokerage firm, agreed to be acquired by Bank of America for $29 a share, or $43.5 billion, after being pressured into a deal by federal regulators over the weekend. This price represents a significant premium to its closing price on Friday of $17 a share. Merrill also has about a 45 percent stake in the asset management firm BlackRock, worth more than $10 billion. Click here for detail from CNBC.
  
• On the other hand, Lehman Brothers is filing for Chapter 11 bankruptcy as there is no buyer as of late Sunday. Federal authorities are expected to be involved in the orderly disposition of Lehman assets. Lehman's fate came after Barclays PLC walked away from a deal to purchase the distressed 158-year-old Wall Street investment bank. Click here for detail from CNBC. Lehman Brothers also has formally announced press release on this matter. It is now game over for Lehman.
• Another financial giant's faith is about to unravel: AIG. Cloberred by losses stemming from the credit crisis, AIG sought a $40 billion lifeline from the Federal Reserve, without which the company may have only days to survive.  Click here for detail from New York Times.

Interview with Warren Buffett in Aug 2008 on various matters: US fiscal crisis, America's future, taxes, Fannie Mae, Freddie Mac, oil, energy, and John Edwards' affair. One of the interview videos: 

Warren Buffett on Financials:

Source: I.O.U.S.A. Live Event, CNBC

For more interview videos with Warren Buffett in Aug 2008, click the title of this blog entry.

"You only have to do a very few things right in your life so long as you don't do too many things wrong." ~ Warren Buffett

Interview video of Charlie Rose in early Sep 2008 discussing Fannie Mae and Freddie Mac with four people knowledgeable about the matter's significance:

• Nouriel Roubini, New York University professor of economics;
• Mohamed El-Erian, CEO of PIMCO;
• Gretchen Morgenson and
• Floyd Norris, both with The New York Times.
  

Source: Charlie Rose

Read more to watch another interview video of Charlie Rose in early Sep 2008 discussing the economy with Robert Rubin, former US Secretary of the Treasury during both the first and second Clinton Administrations and Director and Chairman of the Executive Committee of Citigroup and Larry Summers, former US Secretary of the Treasury and former Harvard University's President.