| September 15, 2008 Negotiations radically change Wall Street landscape
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(Peter Howe, NECN) - A frantic weekend of negotiations has radically rearranged the Wall Street landscape.
Lehman brothers went bankrupt. Merrill lynch, transferred into the arms of Bank of America.
With this spring's Bear Stearns collapse, that's three of the top five US investment banks gone.
The Federal Reserve's been extending investment banks billions in emergency loans to stay afloat. Uncle Sam’s gone on the hook for billions to bail out mortgage companies Fannie Mae and Freddie Mac. But not this time. The treasury secretary finally said enough is enough.
For months investors have prayed the worst of the credit crunch and lending crisis was past ... But many suspected more shoes were going to drop.
After a horrid quarterly earnings report last week, Lehman Brothers stock collapsed.
U-s officials spent the weekend trying to find a buyer for Lehman ... But with its 60 billion in bad real estate holdings, no one would step up.
As panic spread about Lehman’s bankruptcy, Merrill Lynch pre-emptively agreed to be bought by Bank of America for 50 billion dollars ... Hoping to avoid becoming the next falling domino.
In one fell swoop bank of America lands a nationwide stock brokerage and a prime role in Wall Street underwriting.
Grabbing Merrill could rank as the career coup for a legendary dealmaker, bank chairman Ken Lewis.
Ken Lewis Bank of America Chairman and CEO
"The combined company is a much stronger entity and will survive
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