Lehman Brothers Files for Bankruptcy
by Bradley, Editor
September 15, 2008
Lean Capital
After failing to find a buyer, Lehman Brothers, the 158-year old Wall Street investment firm appears ready to file for bankruptcy on Monday, according to reports. The Federal Reserve further relaxed wholesale borrowing requirements, drawing strong interest from the banks. In order to avert a general crisis, the largest remaining investment firms have pooled over $70 billion in capital to help collectively cover their trading positions, and provide a pool of capital.
With the infusion of liquidity, Bank of America appeared close to acquiring investment brokerage Merrill Lynch early Monday. Lynch’s stock had fallen nearly 2/3 for the year, and BoA found the firm an attractive target. Look for consolidation to continue, as a number of remaining firms such as the insurance firm AIG still face uncovered future debt obligations, requiring further capital inflows. Just when it appeared the financial markets were beginning to settle down, an entirely new chapter begins. Black–Scholes be damned…
I think the most worrisome out of all of this is actually AIG. The insurance market hasn’t been been all that bad compared to other areas. If you combine the housing crisis with a tight credit market AND a teetering insurance market, good luck! Hopefully AIG won’t start a trend here.
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[...] has covered the recent financial crisis involving Lehman Brothers, Merill Lynch, AIG, and others. However, we want to make sure our readers have the resources to better understand [...]