Lehman – Bankruptcy, Merrill – Acquired

The U.S. financial crisis is no longer a crumbling cookie. It’s been smooshed by a sledgehammer. Shortly after all parties walked away from a takeover bid for Lehman Brothers, apparently forcing it into bankruptcy, Merrill Lynch, the world’s largest brokerage, was pressured into a takeover by Bank of America, who has already consumed a victim of the recent financial meltdown, Countrywide Financial.

Although I’ve been following the news on a daily basis, I don’t think I’m alone when I say I really didn’t see the situation getting this dire this quickly for the investment houses. And for all we know, this could be just the tip of the iceberg. Washington Mutual and American International have both been hard hit and are under pressure by investors. (AIG will reportedly announce asset sales tomorrow to bolster liquidity.) Of the 5 major U.S. investment houses, it’s starting to look like only Goldman Sachs and Morgan Stanley will be able to ride this crisis out.

My sympathies to the massive job losses that are sure to come at both Lehman and Merrill.


3 Replies to “Lehman – Bankruptcy, Merrill – Acquired”

  1. The Merrill Lynch takeover by Bank of America is pretty surprising. Things must have been pretty bad at Merrill than most people thought. The question now is who’s next?

  2. I predicted this in 2005.


    We just have to see who’s _still_ got dud paper, and what the overall effect of all these collapses will be. Probably … nasty. Could be a full blown depression.

    If I were running the show I would have been brutal and let those companies and individuals who bought dodgy paper or took out loans they couldn’t cover go to the wall, and when the dust had settled, use government money for basic relief and buying strategically important companies while they’re cheap!

    Instead public money is being pored into private hands and/or spent on trash or short-term gap-filling. Stupid, stupid, stupid!

  3. The dominos are falling, and I have a feeling the last domino is going to fall on and crush taxpayers. There’s no way people are going to support bailing out all these financial institutions when they are struggling themselves. Will this get as bad as the great depression? That’s anyones guess…

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