September 15, 2008

The Federation of Connecticut Taxpayer Organizations, Inc. (FCTO)
Contact:  Susan Kniep,  President
Website:  http://ctact.org/
email:  fctopresident@aol.com
860-524-6501

September 15, 2008

 

VOTERS UNITE. VOTE YES ON NOV 4, 2008.

 

For a

 

CONSTITUTIONAL CONVENTION!

 

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BLOOMBERG NEWS RELEASE

U.S. Stocks Decline as Lehman Bankruptcy Deepens Market Turmoil Sept. 15 (Bloomberg) -- U.S. stocks tumbled, erasing more than $300 billion in market value, as Lehman Brothers Holdings Inc.'s bankruptcy fueled speculation credit-market turmoil will deepen.

Lehman plunged 95 percent after the 158-year-old investment bank's subprime mortgage losses pushed it into the biggest Chapter 11 filing. American International Group Inc. retreated 42 percent on funding concerns, while Bank of America Corp. slumped 14 percent after agreeing to buy Merrill Lynch & Co. for $50 billion. Exxon Mobil Corp. and Valero Energy Corp. sent energy shares to a 3.7 percent retreat as oil fell below $95 a barrel.

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RELEASE FROM THE NEW YORK TIMES

 

Lehman Will File for Bankruptcy; Merrill to Be Sold By Andrew Ross Sorkin, September 14, 2008

This article was reported by Jenny Anderson, Eric Dash and Andrew Ross Sorkin and was written by Mr. Sorkin.

 

Jin Lee/Bloomberg News

Related

5 Days of Pressure, Fear and Ultimately, Failure (September 16, 2008)

Stunning Fall for Main Street’s Brokerage Firm (September 15, 2008)

Purchase of Merrill Fulfills Quest for a Bank (September 15, 2008)

Banks Fear Next Move by Shorts (September 15, 2008)

Fed Loosens Standards on Emergency Loans (September 15, 2008)

Times Topics: Lehman Brothers | Merrill Lynch

DealBook: The Struggle at Lehman

Statement: Federal Reserve Board

 

In one of the most dramatic days in Wall Street’s history, Merrill Lynch agreed to sell itself on Sunday to Bank of America for roughly $50 billion to avert a deepening financial crisis, while another prominent securities firm, Lehman Brothers, filed for bankruptcy protection and hurtled toward liquidation after it failed to find a buyer.

The humbling moves, which reshape the landscape of American finance, mark the latest chapter in a tumultuous year in which once-proud financial institutions have been brought to their knees as a result of hundreds of billions of dollars in losses because of bad mortgage finance and real estate investments.

 

But even as the fates of Lehman and Merrill hung in the balance, another crisis loomed as the insurance giant American International Group appeared to teeter. Staggered by losses stemming from the credit crisis, A.I.G. sought a $40 billion lifeline from the Federal Reserve, without which the company may have only days to survive.

 

The stunning series of events culminated a weekend of frantic around-the-clock negotiations, as Wall Street bankers huddled in meetings at the behest of Bush administration officials to try to avoid a downward spiral in the markets stemming from a crisis of confidence.

 

“My goodness. I’ve been in the business 35 years, and these are the most extraordinary events I’ve ever seen,” said Peter G. Peterson, co-founder of the private equity firm the Blackstone Group, who was head of Lehman in the 1970s and a secretary of commerce in the Nixon administration.

 

It remains to be seen whether the sale of Merrill, which was worth more than $100 billion during the last year, and the controlled demise of Lehman will be enough to finally turn the tide in the yearlong financial crisis that has crippled Wall Street and threatened the broader economy.

Early Monday morning, Lehman said it would file for Chapter 11 bankruptcy protection in New York for its holding company in what would be the largest failure of an investment bank since the collapse of Drexel Burnham Lambert 18 years ago, the Associated Press reported.

 

Questions remain about how the market will react Monday, particularly to Lehman’s plan to wind down its trading operations, and whether other companies, like A.I.G. and Washington Mutual, the nation’s largest savings and loan, might falter.

 

Indeed, in a move that echoed Wall Street’s rescue of a big hedge fund a decade ago this week, 10 major banks agreed to create an emergency fund of $70 billion to $100 billion that financial institutions can use to protect themselves from the fallout of Lehman’s failure.

 

The Fed, meantime, broadened the terms of its emergency loan program for Wall Street banks, a move that could ultimately put taxpayers’ money at risk.

Though the government took control of the troubled mortgage finance companies Fannie Mae and Freddie Mac only a week ago, investors have become increasingly nervous about whether major financial institutions can recover from their losses.

How things play out could affect the broader economy, which has been weakening steadily as the financial crisis has deepened over the last year, with unemployment increasing as the nation’s growth rate has slowed.

 

What will happen to Merrill’s 60,000 employees or Lehman’s 25,000 employees remains unclear. Worried about the unfolding crisis and its potential impact on New York City’s economy, Mayor Michael R. Bloomberg canceled a trip to California to meet with Gov. Arnold Schwarzenegger. Instead, aides said, Mr. Bloomberg spent much of the weekend working the phones, talking to federal officials and bank executives in an effort to gauge the severity of the crisis.

 

The weekend that humbled Lehman and Merrill Lynch and rewarded Bank of America, based in Charlotte, N.C., began at 6 p.m. Friday in the first of a series of emergency meetings at the Federal Reserve building in Lower Manhattan.

The meeting was called by Fed officials, with Treasury Secretary Henry M. Paulson Jr. in attendance, and it included top bankers. The Treasury and Federal Reserve had already stepped in on several occasions to rescue the financial system, forcing a shotgun marriage between Bear Stearns and JPMorgan Chase this year and backstopping $29 billion worth of troubled assets — and then agreeing to bail out Fannie Mae and Freddie Mac.

 

Click the following to continue….. http://www.nytimes.com/2008/09/15/business/15lehman.html?_r=1&partner=rssnyt&emc=rss&oref=slogin