An AIG bankruptcy maybe next given their liquidity crisis caused by losses in their derivatives which require an influx of capital to cover. AIG’s credit rating was downgraded yesterday which combined with a widening credit crisis makes bankruptcy more likely.

Joe Grano, a known Wall Street heavy-weight, in an interview on CNBC today calls the recent government solutions to the mortgage and housing crisis “band-aids” and calls for a permanent solution including 50 year mortgages.

Joe Grano discussed many reasons and possible solutions to the financial, credit, and housing market instability. The most intriguing for my money was his suggestion Hank Paulson’s recent legislative solutions were not going to work implying they could not be considered permanent solutions.

Citizens Republic Bancorp like many other banks are showing signs of trouble. A regional bank, Citizens Bank is headquartered in Flint Michigan and posted a quarterly loss of $201 Million.

This operating loss together with a credit write-down and charge for “goodwill impairment” topped out at $220.5 Million.