Mar 3, 2009 6:23 am US/Eastern
Dow Plummets 300; How Low Will It Go?
Big Board Falls Below 7,000 First First Time Since 1997; Goverment Pumps $30 Mil More Into Insurance Giant
Expert: Loan Sharks Would've Broken AIG's Thumbs Long Ago
Reporting
Lou Young
NEW YORK (CBS) ―
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A trader works on the floor of the New York Stock Exchange during afternoon trading February 17, 2009 in New York City.
Mario Tama/Getty Images
It was another dramatic day on Wall Street on Monday as stocks sank to levels not seen in nearly 12 years.
Investors were on edge after news came down that the government will give struggling AIG billions of dollars more in aid.
The Dow Jones industrial average fell well below 7,000 and kept falling, shedding more than 4 percent and 300 points, closing at 6,763.29.
The NASDAQ lost 4 percent and finished down 55 points.
The S&P closed down 34 points, losing more than 4.5 percent of its value.
The big board at the New York Stock Exchange hadn't looked like that since arena rock was popular. Its steady decline all day was fueled news of the largest quarterly loss in U.S. corporate history.
AIG, the giant insurer bailed out by the government three times, still lost $61.7 billion. Ouch.
"They're essentially bankrupt no matter what," NYSE trader Alan Valdes said. "We have to go on; we have to move on. We've had enough of this -- taxpayer money thrown at these companies. It will never end."
The government has put AIG in the too-big-to-fail category so it is dropping another $30 billion in taxpayer dollars on top of the $150 billion the insurance giant has already soaked up. The company keeps coming back for more.
"Goodness knows if these guys were out on the street borrowing money from racketeers somebody would've sent somebody over to break their thumbs a long time ago," said Bob O'Brien of Barrons.com.
Instead, somebody's breaking your 401K, a lack of investor confidence that's rippling through the financial system. AIG has 74 million policy holders in 130 countries and now, it seems, our future in it's portfolio as well.
"We have made meaningful progress in addressing liquidity issues related to AIG Financial Products and our securities lending activities and have announced several divestitures," AIG chairman and chief executive Edward Liddy said in a statement. "However, the economy and capital markets remain in turmoil and we are taking additional steps to preserve the value of our businesses and maximize the ultimate proceeds for the benefit of all stakeholders, including taxpayers."
It marked the fourth time the government has stepped in to help AIG. Its initial lifeline came in September. The action was announced jointly early Monday by the Treasury Department and the Federal Reserve.
The new package is designed to enhance the company's capital and liquidity to facilitate the "orderly completion of the company's global divestiture program," the agencies said.
They said the company continues to face "significant challenges" due to the rapid deterioration in certain financial markets in the last two months of the year. "The additional resources will help stabilize the company and in doing so help stabilize the financial system," the agencies said.
AIG has been forced to seek more help in part because of the ongoing recession and its falling stock price, now well under $1. Among its biggest problems: It can't sell assets to pay back government loans because the credit crisis is preventing would-be buyers from getting financing to complete such deals.
As of Feb. 13, AIG had sold interests in nine businesses.
(© 2010 CBS Broadcasting Inc. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The Associated Press contributed to this report.)
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