From Salon
By Andrew Leonard

Lehman Brothers is now yesterday’s news. On Tuesday morning, the attention of Wall Street fixated on the fate of the colossal insurance company American International Group (AIG) a company neck deep in derivative credit insurance products that are blowing up left and right.

AIG says it needs $75 billion to keep going, and the Treasury is strongly encouraging Goldman Sachs and JPMorgan Chase to lend the company the money. Meanwhile, New York Gov. David Paterson has already authorized AIG to borrow up to $20 billion from its subsidiaries — which by law have to maintain large asset bases to be able to pay off insurance claims — to staunch the bleeding in the division that handles exotic financial products, such as credit derivatives.

But the question still hangs in the balance — what if Goldman and JPMorgan can’t or won’t come up with the cash? They’ve got their own problems: After Goldman’s share price dropped 12 percent on Monday, the investment bank announced a 70 percent decline in net profits for the most recent fiscal quarter. So how much leverage does Hank Paulson have? AIG’s entanglement in the crisis — its exposure to corporate defaults and mortgage-backed securities gone bad — is immense. Despite the tough talk from Paulson, a bailout is not off the table.

Which brings us to John McCain. On Monday, his campaign released this official statement:

The crisis in our financial markets has taken an enormous toll on our economy and the American people — first the decline of our housing markets followed by the collapse of Bear Stearns, Fannie Mae, Freddie Mac and now Lehman Brothers. I am glad to see that the Federal Reserve and the Treasury Department have said no to using taxpayer money to bailout Lehman Brothers, a position I have spoken about throughout this campaign.

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