Black Monday: Financial Stocks Free Fall

by Derek Loosvelt | September 15, 2008

On news that Lehman Brothers filed for bankruptcy, Merrill Lynch was sold to Bank of America and AIG was holding on for its life, financial stocks plummeted today, bringing down the Dow and S&P 500 to lows that haven’t been seen in years.

Lehman’s shares dropped 94 percent to 20 cents, and a host of other financial firms saw their share prices decline by double-digit percentages—BofA, Citi, Morgan Stanley, Goldman Sachs, JPMorgan Chase and Washington Mutual were all big losers today. Overall, more than $600 billion in value was lost in the U.S. stock markets.

Indeed, it was not a pretty day in the finance sector, and many think the problems are just begginning. Ex-Fed Chairman Alan Greeenspan predicted that more banks will fail, and BofA CEO Ken Lewis said an AIG failure would have a much a larger impact on the markets than Lehman’s bankruptcy.

As for Lehman insiders, unsurprisingly, many are deeply saddened, feeling betrayed by an employer that encouraged them to take personal stakes in the firm. Many have cleared out desks, begun frantically calling headhunters in search of new homes and, as happened in the hours following Bear Stearns’ demise, starting auctioning off memorabilia, including Lehman mugs, hats, t-shirts, pens and umbrellas. Also up for grabs on e-Bay are the web site domain names www.falloflehman.org and www.lehmanlawsuits.com (the bidding opened at $100 for each).

On a more serious note, our sympathies go out to the Lehman employees affected by this recent turn of events. Lehman's bankruptcy will put thousands out of work, and though, sure, many of the those at the top of the org chart might not suffer that much, there are many who've only recently joined the bank—perhaps just of college or grad school—and are now forced to look for new jobs in a very tough market, which will likely get a lot tougher in the next few weeks. And, of course, not everyone who works for an investment bank like Lehman makes a six-figure salary (and/or is without dependants) and thus can survive without a paycheck for a few months. So, if anyone (Lehman insider or not) has any not-so-obvious advice (job or otherwise) for those affected today, we welcome, as always, your suggestions, thoughts or comments below.

Filed Under: Finance


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