The rescue of insurance giant American International Group yesterday saw Wall Street "give a huge sigh of relief", Forsyth Barr sharebroker Ken Lister said.
"But while Wall Street gave a sigh of relief, the US taxpayer is likely to be asking questions as to why taxpayer money should be used.
Failure to rescue AIG would have caused chaos in the world markets and threatened many more financial companies."
The US Federal Reserve Board said the Federal Reserve Bank of New York will lend up to $US85 billion ($NZ130.9 billion) to AIG in a plan aimed at saving the insurer from a "disorderly failure" that could wreak economic havoc.
The Fed said under the two-year facility the US government would receive a 79.9% equity interest in AIG and had the right to veto payment of dividends to common preferred shareholders in the deal, which had the full support of the Treasury Department.
"The board determined that, in current circumstances, a disorderly failure of AIG could add to already significant levels of financial market fragility and lead to substantially higher borrowing costs, reduced household wealth and materially weaker economic performance," the Fed said in a statement.
The loan, secured by all assets of AIG and its primary non-regulated subsidiaries, was designed to assist the insurance giant in meeting its obligations as they come due.
It would enable a process under which AIG would sell certain of its businesses in an orderly manner, with the least possible disruption to the economy.
The loan was expected to be repaid from proceeds of the sale of the firm's assets.
US Treasury Secretary Henry Paulson, in a separate statement, said that US financial regulators were engaged in a broad effort to try to restore some stability to battered financial markets.
"We are working closely with the Federal Reserve, the SEC and other regulators to enhance the stability and orderliness of our financial markets and minimise the disruption to our economy," he said.
Mr Lister said AIG was seen as a national asset in the US, unlike Lehman Brothers, which filed for bankruptcy on Tuesday, New Zealand time.
The counterparty risk was massive there would have been far-reaching implications globally had the Fed not stepped in after talks failed with interested parties, he said.
In a separate development, Barclays PLC said it had agreed to acquire Lehman's North American investment banking and capital markets businesses for $US250 million ($NZ385 million) in cash.
The British bank would also purchase Lehman's New York headquarters and its two data centres in New Jersey for $US1.5 billion.
The deals required approval from the bankruptcy court.
Barclays said it would acquire Lehman's North American banking operations, which included fixed income and equities sales, trading and research and investment banking business.
The deal throws a lifeline to about 10,000 employees working in the divisions.
Barclays and Lehman reached the agreement hours after Lehman's first bankruptcy hearing in a crowded courtroom at the US bankruptcy court in Manhattan, just steps away from Wall Street's distinctive bull statue.
JPMorgan advanced Lehman $US87 billion when the US market opened on Monday (Tuesday, NZ time), acting in part on a request by the Federal Reserve Bank of New York.
The New York Fed later repaid JPMorgan that amount.
Yesterday, JPMorgan advanced another $US51 billion.
Shai Waisman, a lawyer for Weil, Gotshal & Manges, representing Lehman Brothers, in his opening statement argued that Lehman Brothers' downfall was the result of a "chain reaction" of events that were largely out of the investment bank's control.
"Lehman operated in an extremely unfavourable business environment," Mr Waisman said, referring to declining asset values and low levels of liquidity.
