Lehman bankrupt; Merrill Lynch sold
September 16th, 2008 | by argentiumsterlingsilverexperiences |
(CNN) — The venerable Lehman Brothers investment bank said early Monday that it will file for bankruptcy, while Bank of America unveiled plans to buy Merrill Lynch — two pieces of news that profoundly alter the American financial landscape.
The value of Lehman Brothers shares declined 94 percent in the past year.
The fast-paced changes capped a roller-coaster Wall Street weekend and threatened to stir up U.S. financial markets already reeling from woes at other major financial firms and mortgage financing titans Fannie Mae and Freddie Mac.
"This crisis is clearly deeper than anybody had imagined only a short time ago," Peter Stein, an associate editor at The Wall Street Journal in Asia, told CNN.
Lehman Brothers said in a statement early Monday that it plans to file for bankruptcy under Chapter 11 of the U.S. Bankruptcy Code. The 158-year-old investment bank had been undermined by bad bets on real estate — the value of its shares declined 94 percent this year.
The fall of Lehman followed a wild, three-day scramble by top Wall Street executives and federal regulators, who worked around the clock to come up with a solution to a still-unfolding financial crisis.
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By the end of the weekend, the Federal Reserve had stepped in to try to calm the markets by announcing plans to loosen its lending restrictions on the banking industry. iReport.com: Are you feeling the pinch?
A consortium of 10 leading domestic and foreign banks agreed to create a $70 billion fund for loans to troubled financial firms.
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Yet the last-minute efforts provided little comfort to financial markets around the globe.
The Dow Jones industrial average plunged more than 2.5 percent just after the opening bell on Monday, before paring some of those losses.
That nervousness levitra online also spread to the currency markets as the dollar slipped in value against both the euro and the yen.
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The $50 billion Bank of America-Merrill Lynch deal — announced in the wee hours Monday by Bank of America — could help temper a market sell-off, said Dan Alpert, managing director of the New York City-based investment bank Westwood Capital.
"This sort of offsets the Lehman thing," he said, "but the reality is that it is just a short-term impact."
Stein agreed.
"On the one hand, the news about Merrill may be seen as a positive; Lehman, definitely a negative," he said.
Bank of America pl
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(Reuters)
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