Lehman Files For Chapter 11, BoA Buys Merrill Lynch

Bankers worked hard over the weekend to prevent the American financial system from imploding.

  • Lehman filed for Chapter 11
  • Bank of America bought Merrlil Lynch
  • A special trading session was opened Sunday from 2-6pm to allow traders to try to unwind their positions
  • The Fed is expected to temporarily make it easier for banks to borrow from the government
  • European Central Banks stand ready to pump billions into the global market
  • Washington Mutual’s new CEO’s disclosure of further writedowns and setting aside of capital calmed investors and stemmed the massive selloff of its stock

Should be an exciting day to watch the stock market.

(Photo: Getty)

Comments

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  1. shoelace414 says:

    One thing I never heard was what does it mean for people with investment accounts in Lehman? 401k or otherwise?

    I don’t have one, but nobody is answering that question.

    • thebluepill says:

      @shoelace414:

      A lot of it depends on your percentage of your 401k bieng in Lehman Stock. The portions of your 401K based on that stock will be worthless.

      The base 401k is required to be admin’ed by a 3rd party. It should be sound and protected.

  2. thebluepill says:

    Exciting day to watch.. but the key is to just ride out low spots and not panic. Within a week or two, things will bounce right back.

    • @thebluepill: Within a week or two, things will bounce right back.

      You sure about that? ‘Cause I was hoping for that back in January. Now 9 months later, I’m inclined to think that “a week or two” is a bit optimistic.

      But you are right about riding it out. (In most cases. I’d be nervous if I was still holding some WM.)

  3. SonicMan says:

    Usually those funds are insured to 250k from the FDIC. But Im not sure, since I do not use LB.

  4. SigmundTheSeaMonster says:

    Well this blows. I mean, I recall voting for BoA as worst company but Countrywide took that.
    Alas, a colleague’s wife works for ML. She’s watched cut after cut after layoff around her. I’ll know more after their 11am “town hall” meeting.

  5. Wormfather is Wormfather says:

    I feel really bad for my best man, who works for Merril (best case senario: He works for BoA, ::shutters::), but it’s about time the fed stopped bailing out these banks!

    Now, I’m off to watch my 401K plummet.

    • Anonymous says:

      @Wormfather is Wormfather: The Fed is not bailing out Lehman.

      • Wormfather is Wormfather says:

        @MeSoHornsby: I know, maybe I should have phrased it differntly, ie. Thank god, it’s about time to fed stopped bailing out these banks.

        Better?

        @Pixelantes Anonymous: BoA has cash on hand like a bookie and they’ve got barclays backing them. They didnt invest into the mortgage mess. Also, they bought Fleet back before this all started they also have LaSalle. The reason I mention that is because that money people has in savings, it there’s to play around with.

        At the end of the day this is actually really good for BoA, they are becoming the Voltron of the financial world, except Voltron had better customer service.

  6. I woke up this morning, turned on the TV and saw the stock ticker bleeding red and I said “uh, uh, the other shoe just dropped”?

  7. iMe2 says:
  8. What kind of funny money is BofA using to buy Merrill?

    I thought BofA wasn’t doing that well itself either, but they’re throwing money around like they are. Fleet, Countrywide, and now Merrill.

    • hellinmyeyes says:

      @Pixelantes Anonymous:

      I agree. That’s what’s making me so nervous about this weekend’s activities. Out of all the investors out there, I never in a million years pictured Bank of America going after Merrill. I just don’t see how they can put up the kinds of cash they’re putting up for these banks. Granted, they got Countrywide at quite a bargain, but it’s still a lot of cash money that they’re putting out just to get the new purchases.

    • yasth says:

      @Pixelantes Anonymous: Ummm they aren’t using money they are using stock. So it is very funny money indeed.

      The “joke” rumor on Wall St. is they are trying to acquire enough to be too big to fail. Not that many people are laughing anymore, and if they pick up another failing bank…

  9. vastrightwing says:

    A match made in heaven! BoA and Merrill Lynch were made for each other! I am a former client of both and now that the two are together is so ironic. No one needs and introduction to BoA. As for Merrill, just search for “Merrill and Enron”. Wow!

  10. nycdoctor says:

    It is about time that these crooks go down. From inside trading to scamming the small investor out of their money, it is about time the government stop bailing the rich out. This is a free market, not socialism only for the rich. These company don’t produce anything and make money from the labor of the average person.

  11. oldheathen says:

    I’d seriously consider cashing out my 401k or moving it all into some token interest-bearing account if the U.S. dollar wasn’t already so devalued. It’s difficult not to be paralyzed by indecision.

    • Wormfather is Wormfather says:

      @oldheathen: Depending on your age, that’s a really bad decision. I know it sounds trite, but when the market is plumeting that’s when you should up your investment. To pull out is to say “Fine, I lose”.

      You end up selling low and buying high.

      Now if you’re in your late forties or older…

    • yasth says:

      @oldheathen: Moving your money to bonds would be what you mean, as cashing out your 401k would have horrid consequences penalty wise.

      It is by the way a great way to have a story about how you sold near/at the bottom of the market. (Not bottom calling at all mind you, but eh, 401k funds shouldn’t be messed with except for reasons of age.)

  12. bkpatt says:

    I love a good roller coaster as much as the next guy, but… that first big downhill has been going strong for about a year now, I’m ready for a few spirals and loops so I can get off this effin’ ride.

  13. thebluepill says:

    WaMu Is next to fall..
    I expect to see Wachovia in some hot water too, but not a collapse.

  14. blackmage439 says:

    “Bank of Opportunists” indeed. Those sly bastards know what crappy markets to stay out of, and when to pounce on a great deal. If they weren’t the dishonest, money-grubbing corporation they are, I would have the utmost respect for BoA.

  15. Sam Glover says:

    Hands in the air, everyone! We’re going downhill!

  16. Must BofA swallow everything in its path?

  17. kthxbai says:

    Hey well I lost my job today… or I will be loosing my job at Merrill…. fucking bastards. they Hire a million new bastards just so Thain can make his friends rich… bastards… they did nothing exept take away our water bottles!

    BEN tell Gizmodo to hire me as their intern… i need work!

    • Wormfather is Wormfather says:

      @etaripamai: Sorry man, Merril had to take the offer on the table, they would have opened around $10 a share and even if they had the liquidity to stay afloat rummors were going to do them in.

      I hope you find work man.

      • kthxbai says:

        @Wormfather is Wormfather: thanks man… havent heard the official word yet but it looks grim…. I applied for the Giz NYC internship… wouldnt be to bad… all i do at work is read Gawker Media anyway lol I appreciate the support though man

  18. kthxbai says:

    BTW BOA’s takeover includes the 49 percent opertaiong stake in blackrock and their recent aquisition First Republic bank

  19. pal003 says:

    If I were a Lehman’s account holder and about to lose a lot of money – I’d go looking for their CEO Richard Fuld – who managed to cash out over $120 million just last year alone. The highest of financial companies CEOs – just below fellow financial criminal Mozillo from Countrywide.

    We need to see these financial-whiz CEOs bankrupted and convicted of fraud.

  20. rollergirl76 says:

    Thank God, I work for the enemy. Just as long as I can pay my bills and retire with a ton of money, then I don’t mind working for a monopoly. If you can’t beat em’, join em’!

    The worst company title belongs to Comcast.

  21. mrearly2 says:

    What’s that nonsense: “The Fed is expected to temporarily make it easier for banks to borrow from the government.”
    It’s the (private) Federal Reserve, that lends to smaller banks and government. The government has nothing–nothing but debt, that’s passed on, to the little people.

  22. redclear55 says:

    ML + BOA = major player in their industry. their market share will be tremendous. they could be very competitive. i would characterize this as diversifying their business by not just being an investment bank and a brokerage house, but also the commercial banking as well. ML is already ranked number one among other broker dealers by amount of assets and advisers.

    the difficulty will be how well they integrate. my company absorbed a small firm a few years back and we’re still dealing with integration issues. the downside of merging is that many jobs will be replicated and thus, eliminated. obviously BOA has priority as the buyer. short term this will affect the economy negatively, but long term is necessary. unfortunately most people play the margins on the short term, so we will suffer for a bit longer.

    as for me… i will let this play out over the remainder of the week, but i am definitely looking at adding to my portfolio. it pays to be contrarian, sometimes heftily. no risk, no reward.

  23. MrDo says:

    we actually need fewer banks, not more. its good to see the feds not bailing out any further groups because it sends a message. yes, the helped bear/stearns and fan/fred, but I’d like to think that someone in Washington actually remembered what happened to Japan when they went through almost the exact same situation and is saying enough is enough.

    a lot of these failing institutions got really greedy and made a run on subprime and cashed in, but they ignored all the risk involved, and continued to be willfully ignorant to the housing bubble. seriously, how many billions in income came to these people in the last 4 years?

  24. dasunst3r says:

    While driving, I saw a restaurant with a sign that says, “We’re so cheap that Lehman Brothers stockholders can eat here.” I SO need to take a picture of that!