A long weekend of talks attempting to figure out a way to save Lehman Brothers, one of the country's oldest investment banks, concluded with the bank filing for Chapter 11 bankruptcy protection. The 158-year-old firm surrendered to failure after midnight last night and the effects could already be seen in this morning's down market. Lehman was left with no other option but bankruptcy after they couldn't find a buyer. The New York Times has called this "one of the most dramatic days in Wall Street history"; learn what the financial drama means for investors and Lehman employees when you read more.
At first it looked like Bank of America would save Lehman, but instead B of A bought Merrill Lynch with the idea that Merrill may be the next big bank to go down. Lehman's dire situation and Bank of America's actions have left investors asking which bank will be next, and their stress increases as they watch the value of their portfolios decline. Of the five independent investment banks that lived on Wall Street at the beginning of 2008, only Goldman Sachs and Morgan Stanley are still alive; all of the trouble can be traced back to real estate related business gone bad.
Lehman Brothers employees have been filing out of the bank's Manhattan headquarters from last night through this morning, and the spectacle, complete with police barricades, left some observers asking what famous person was in the area. A cop told the crowd, "Go home. There is no one famous coming out. You are looking at a whole bunch of people who just lost their jobs."
Napapijri
Milly
Elle Macpherson
Very sad and scary.
1BofA is going to swallow as much as they can to rule the financial world. Not only are they attempting to rule every corner of the financial ecosystem, they may realize something liek $7B in operational efficiencies in 2012. Go Ken Lewis and homies Vikram Pandit, Jamie Diamond, and Lloyd Blankfein.
2Ok Savvy, I have a question (or for any other smart financial ladies). I recently moved and I'm looking for a local bank. Lately all this terrible news about banks and other financial institutions has made me really be picky about who I choose as my bank. What's the safest and most secure route for me to take? Should I go to a credit union? Should I only use a bank that has a very small percentage of business in the mortgage industry?
Thanks!
3The sad part is if you look at some of the employees who took company equity, if they held they basically worked for free.
4I feel for the employees and their families.
5So when do I start stuffing money under my mattress?
6This makes me sick(in one of those nervous kind of ways). I need to buff up on my financial history in the US and other countries.
Would it be better to just use a credit union? Could Savvy do an article on the differences btw a traditional bank & credit union?
7I also want to see an answer to Syako's question. I probably could ask my BF Sy- he works in finance. But he is so swamped and stressed at work over this mess than I doubt I will get to speak to him until much later tonight.
8SugarKat- I've already done a post on bank vs. credit union. Here's the link: http://www.savvysugar.com/1590391
9very sad, I feel for them all, it is a horrible thing to lose one's job, don't wish it on an enemy. I pray it eases for the better for those affected.
10very sad, I feel for them all, it is a horrible thing to lose one's job, don't wish it on an enemy. I pray it eases for the better for those affected.
11As long as your bank is FDIC insured and you don't go over the max guaranteed coverage, your money is safe. This news mostly pertains to people with investments, not savings/checking accounts. Investments have slightly different rules. However, if you're looking for a bank, you may want to do some Google searches to learn more about the bank just to be safe. Washington Mutual is one that has been in the news with some difficulties...so it's worth a search or two.
I wish the media wouldn't be so vague on these things instead of sending so many people in a tizzy. Especially people like us who aren't as financial/economy savvy.
12Exactly, GeriAnne. I will post something tomorrow expanding on that explanation.
13i have to say that it makes me a lot more nervous these days. my family has accounts with Morgan - and well...i feel like we're safe for now - but who knows...right? with banks like these 2 folding the same day or needing to be bailed out - it's just a coin toss to see who will be next.
they keep talking about how lehman waited too long to find a buyer and that's how things went so pear shaped so fast - but i don't know how to safeguard that...and my investments. at least BoA was able to help ML - but is this it for now?
14It's all over the news in the UK this morning, as the Lehman Brothers bankruptcy also hit the London stock market pretty badly.
15Very scary, and very sad for all these people who are now suddenly unemployed.
Thanks Savvy. Are CUs FDIC insured? Maybe I should go check that post. I read and responded already, but maybe you've responded.
I have a CU for my savings because I can have my paycheck go to two different places...I have the regular direct deposit go to the bank that I use to pay all the bills and such and then the CU for savings every month.
16Yep, it was in the later post. Thanks for all your answers!!!
17I'm out of a job. Anyone here hiring?
18Very scary...
19I feel so sorry for the people who have lost their jobs! It is very scary to see such big and successful banks lose so much!
20so so so scary...
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