In one of its wildest and weirdest stretches ever, Wall Street entered a
weekend awaiting a government bailout of Lehman Brothers Holdings Inc. (LEH) and exited with Merrill Lynch & Co. Inc. (MER) agreeing to sell itself to Bank of America Corp. (BAC) for nearly $50 billion – and Lehman announcing it will seek
bankruptcy in a bid to avoid a total liquidation after it was unable to find a
buyer.
And this real-life version of the game show “Let’s Make a Deal,” is far from
over: Like a once-great prizefighter who’s clawing for the ropes after being
staggered by a shot to the chin, U.S. insurance giant American International
Group (AIG) is trying to keep from dropping to the canvas. AIG leaders
begged the U.S. Federal Reserve for a $40 billion lifeline – without which the
insurance giant probably won’t last the week, The New
York Times reported.
There’s even conjecture that the beleaguered Washington Mutual Inc. (WM) – the nation’s largest savings and loan – may get pulled
down by this financial undertow.
“The tectonic plates beneath the world financial system are
shifting, and there is going to be a new financial world order that will be
born of this,” Peter Kenny, managing director at Knight Capital Group Inc. (NITE), the New Jersey-based brokerage firm that
handles $4 trillion in stock transactions a year, told Bloomberg
News. “It’s an ugly and painful process.”
With Wall Street’s leaders huddled in meetings at the encouragement of the
Bush Administration, yesterday’s fourth-down wheeling and dealing capped a
weekend of furious, round-the-clock negotiations that demonstrate one very
critical point – the credit crisis isn’t over.
In fact, it may actually be getting worse.
Many experts now worry that the U.S. financial sector faces a “crisis of
confidence,” a potentially devastating psychological impasse from which there’s
no easy escape. The stunning-and-sweeping moves, which are permanently reshaping
the U.S. financial sector, are the latest chapter in a financial crisis that has
resulted in hundreds of billions of dollars in losses – ostensibly due to bad
real-estate loans, The Times reported.
“My goodness. I’ve been in the business 35 years, and these are the most
extraordinary events I’ve ever seen,” said Peter G.
