Monday, September 15, 2008

Lehman Bros Files Bankruptcy

Updating my last post, Lehman Brothers couldn't find a buyout/bailout partner and the US government held firm in their "No", so the 158 year old firm filed for bankruptcy this morning. Lehman was the fourth largest US investment bank and had lost billions in the US mortgage market.

World stock markets reacted by dropping sharply. The Dow Jones dropped a little over 300 points in the first 10 minutes of trading. The S&P fell 1.9%. The FTSE 100 in London was down 5% by early afternoon trading and Paris and Berlin saw similar drops in the first hours of trading. Lehman's stock was down 90% in the first few minutes after the announcement.

In somewhat related events, Merrill Lynch brokered a $50 billion all-stock takeover by Bank of America. Merrill's website already has a press release up, linked from a huge headline on the landing page. According to Merrill, the decision has been approved by directors of both companies and is subject to shareholder votes and the standard regulatory process. The deal is expected to close in early 2009.


  1. The BBC News Online

  2. New York Times

  3. Financial Times US