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by Derek Loosvelt | September 15, 2008


It was a busy weekend for several of the top banks in the world.

In somewhat expected news, Lehman Brothers, after failing to find a suitor as a result of the federal government refusing to support a takeover of the bank, filed for Chapter 11 bankruptcy. Lehman has cut approximately 3,000 of its workers over the course of the past year, and if it liquidates, as expected, the remainder of the firm’s 25,000 employees will be let go. (The bankruptcy filing does not apply to Lehman Brother Asset Management or Neuberger Berman, LLC, whose portfolio management, research and operating functions will remain intact.)

Meanwhile, in unexpected news, Bank of America, which was considering acquiring Lehman as late as Friday night, agreed to acquire Merrill Lynch for $29 a share, or $44 billion. The combination of BofA and Merrill Lynch—which was worth about $100 million not too long ago—will create the country’s largest brokerage house and consumer banking franchise. Merrill’s 17,000 brokers and BofA’s wealth managers will combine to form a powerful unit that will be known as Merrill Lynch Wealth Management.

Of course, the demise of Lehman and the sale of Merrill means there will be thousands of more bankers out of work and looking for new homes. Much worse, it also signals that there could be many more joining them soon.

As for how the markets have responded to the news, in the first 10 minutes of trading, the Dow Jones Industrial Average fell 300 points but has rebounded somewhat since then.


Filed Under: Finance

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