Lehman Brothers, the fourth biggest investment bank in the US has filed for bankruptcy a few days ago.
Founded in 1850, is a global financial-services firm. The firm does business in investment banking, equity and fixed-income sales, research and trading, investment management, private equity, and private banking. It is a primary dealer in the U.S. Treasury securities.
The 158-year-old bank, with a Market Cap. Of USD180 millions (As of Sep 15, 2008), which has weathered previous financial upheavals and saw its offices destroyed in the September 11 World Trade Center attacks, filed for Chapter 11 bankruptcy after reporting around USD6.5 billions up to Q3 this year, which grants protection while it works out a plan to pay back creditors. Leaving 25000 unemployed person in the US alone.
The investment giant was in negotiations with Bank Of America and Barclay’s Bank for a buy out before both of the banks pull out of the talks, Bank Of America preferred to buy the next biggest victim of the credit crunch, Merrill Lynch, the deal worth USD 50 billions.
Lehman collapse was a disaster, it pulled down the global markets with at least 3%, the Dow Jones industrial average fell 504 points or 4.4% on Monday, 15-Sep-2008, the worst decline since September 11, 2001 .
The Middle East markets tumbled too. And it’s not just Lehman Brothers and Merrill Lynch, American International Group (AIG), and Washington Mutual are in danger too.
The important thing to notice here, is that this is a domino effect, so unless something serious done about that, like what the US government did with Freddie Mac and Fannie Mae. So, this is just the tip of the iceberg.
Sources: http://www.abclocal.go.com/
http://www.wikipedia.com/
http://www.cnn.com/
http://finance.yahoo.com/
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