Government Accused Of Botching Major Bailout

The Guardian reports that a report prepared by Neil Barofsky, the Special Inspector General for the US Troubled Asset Relief Program, has citicized the US government for its handling of the bailout of AIG.

The report concludes that the terms of the initial bailout in September 2008 was so harsh, that it actually made matters worse for the company and made further bailout requests from AIG almost inevitable. The government also came under fire for agreeing to pay all AIG's credit default swap counterparties in full, saying that the decision 'gave each of the major counterparties effective veto power over the possibility of a concession from any other party'.

In the meantime, The Financial Times reports that Lehman Brothers launched a $12bn lawsuit against Barclays Capital Monday, seeking to clawback assets it says were improperly transferred when Lehman's US broker-dealer business was acquired by the UK firm post Lehman's bankruptcy.

And Bloomberg reports that Sal. Oppenheim, which has already sold its wealth management business to Deutsche Bank, has turned down an offer from Macquarie to acquires its investment banking unit. Talks are said to have collapsed over price. Macquarie is thought to have offered less than $300m.

The New York Post reports that Al de Molina has been asked to step down as CEO of GMAC Financial Services, as the company concludes discussions with the US government for a third bailout. De Molina, who spent 17 years at Bank of America, has been tipped by some as a possible successor to outgoing CEO Ken Lewis. The newspaper says, however, that de Molina has not been considered for the role.

And Bloomberg reports that Alberto Micalizzi, the founder of hedge fund Dynamic Decisions Capital Management, has said that claims that he has invested in worthless bonds are wide of the mark. The $550m fund is being liquidated following concerns over the quality of its assets, but Micalizzi says that investors should recover close to 100% of their investments.

Finally, Bank of America has not commented on a Business Insider story that the firm has told client support staff at its Merrill Lynch Global Wealth Management unit that they will have to work two and a half extra hours each week (without extra pay). Some of the unit's financial advisers are said to be concerned that the decision could cost them some of their much-needed junior colleagues, who may decide to go work elsewhere.

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