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.