By Mark Scott
http://stream.publicbroadcasting.net/production/mp3/wbfo/local-wbfo-760499.mp3
Buffalo, NY – It's often been said when Wall Street catches a cold, the entire state feels the effects. That's certainly the case with what's happening in the financial markets this week.
Wall Street makes up one-fifth of the state's economy. As such, any problem in the investment banking industry creates havoc statewide. Monday, Governor David Paterson took pre-emptive active to help New York City-based American International Group, one of the nation's biggest insurance companies.
Paterson has given state permission to AIG to access $20 billion of capital in its subsidiaries to free up some much needed cash.
Paterson's decision to help AIG came on the same day that the venerable Lehman Brothers shut its doors. In that case, neither the state or federal governments did anything to save the brokerage. Christian Tiu, an assistant professor of Finance at the University at Buffalo, said the government did the right thing in not bailing out Lehman.
Financial experts say bailing out each and every struggling financial institution would create an even greater crisis.
The Dow has posted its largest one day loss yesterday since the September 11th attacks, losing more than 500 points. But Tiu says investors shouldn't panic and should maintain their long-term view.
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