La situazione dovrebbe essere rassicurante anche per gli istituti italiani che sempre secondo fonti di mercato non avrebbero posizioni aperte su Lehman Brothers.
Diversa la situazione per il colosso assicurativo francese AXA. La compagnia, tramite la controllata AllianceBernstein Holding (di cui detiene il 62,7% del capitale attraverso AXA Financial) avrebbe un’esposizione importante verso i titoli Lehman Brothers (pari al 9,2% del capitale).
Il gruppo ha però specificato che la partecipazione è detenuta per conto della clientela e non direttamente dalla banca. Diversa è invece la situazione rispetto il debito di Lehman, verso cui AXA ha un’esposizione diretta.
Chi esce con le ossa rotte da LB è quasi certamente George Soros. Il famoso investitore ungherese negli ultimi mesi ha gradualmente aumentato l’esposizione verso LB (attraverso il fondo hedge Soros Fund Management LLC) fino a 9,5 milioni di titoli. In base ai prezzi di carico del titolo, Soros potrebbe dover affrontare una perdita compresa tra 120 e 380 milioni di dollari.(mm)
Monday, September 15, 2008
Wall Street Meltdown: Lehman Files for Record Bankruptcy, Merrill Lynch is Sold, AIG Seeks Capital-
When Wall Street woke up Monday morning, two more of its storied firms had fallen.
Lehman Brothers, burdened by $60 billion in soured real-estate holdings, said it is filing for Chapter 11 bankruptcy after attempts to rescue the 158-year-old firm failed.
Bank of America Corp. said it is snapping up Merrill Lynch & Co. Inc. in a $50 billion all-stock transaction.
And the world's largest insurance company, American International Group Inc., was forced into a restructuring as it sought a lifeline from the Federal Reserve....
Lehman Brothers, burdened by $60 billion in soured real-estate holdings, said it is filing for Chapter 11 bankruptcy after attempts to rescue the 158-year-old firm failed.
Bank of America Corp. said it is snapping up Merrill Lynch & Co. Inc. in a $50 billion all-stock transaction.
And the world's largest insurance company, American International Group Inc., was forced into a restructuring as it sought a lifeline from the Federal Reserve....
U.S. Stock-Index Futures Tumble on Lehman; AIG, JPMorgan Fall
U.S. Stock-Index Futures Tumble on Lehman; AIG, JPMorgan Fall
By Allen Wan and Adria Cimino
Sept. 15 (Bloomberg) -- U.S. stock-index futures tumbled on concern Lehman Brothers Holdings Inc.'s bankruptcy filing will exacerbate credit-market turmoil.
Lehman, once the fourth-largest U.S. investment bank, has filed a Chapter 11 petition after potential buyers abandoned talks and the U.S. government declined to fund a takeover of the crippled firm. Bank of America Corp. cemented its status as the largest U.S. consumer bank by agreeing to acquire Merrill Lynch & Co., the world's biggest brokerage firm, for about $50 billion.
Standard & Poor's 500 Index futures expiring in December retreated 46.20 points, or 3.7 percent, to 1,212.4 at 9:58 a.m. in London. Stocks in Australia dropped and U.S. Treasuries rose the most since January as investors sought the relative safety of government debt.
``The collapse of this deal casts a dark cloud over Wall Street,'' said Frederic Dickson, who helps oversee $25 billion as chief market strategist at D.A. Davidson & Co. in Lake Oswego, Oregon. ``It also sends a message that the government is getting out of the bailout business and makes financial institutions like AIG and WaMu look even more vulnerable.''
American International Group Inc., the largest U.S. insurer, plunged 46 percent last week and Washington Mutual Inc., the country's biggest savings and loan, dropped 36 percent on concern about their financial health.
Emergency Session
Federal Reserve and U.S. Treasury officials met in an emergency session as Barclays, the U.K.'s third-largest bank, abandoned talks to acquire Lehman after failing to win government guarantees against losses. The companies were considered leading candidates to acquire the 158-year-old investment bank after record losses erased 94 percent of its stock value this year.
Lehman sank $2.6, or 81 percent, to 69 cents in Germany. Other U.S. banks also fell, with JPMorgan Chase & Co. losing $3.2, or 7.5 percent, to $38.05 in Germany.
Merrill climbed $6.89, or 40 percent, to $23.94 in Germany, while Bank of America lost $4.80 to $29.94 in Germany.
Bank of America will swap 0.8595 shares of its stock for each Merrill share. The bank pulled out of talks yesterday to acquire Lehman. That works out to $29 a share, based on Bank of America's closing price of $33.74 on Sept. 12.
AIG shares lost $3.11, or 26 percent, to $9.03 in Germany. The largest U.S. insurer by assets was working on plans late yesterday to raise capital and sell units to forestall credit downgrades from hobbling the company.
Australian Shares
Australia's S&P/ASX 200 Index slumped 86.1 points, or 1.8 percent, to 4,817.70 in Sydney. Stock markets in Japan, Korea, Hong Kong and China are closed for holidays today.
The yield on two-year notes dropped 34 basis points, or 0.34 percentage point, to 1.87 percent as of 7:23 a.m. in London, according to bond broker BGCantor Market Data. The dollar declined to $1.4481, the lowest since Sept. 4, before trading at $1.4401 per euro at 7:05 a.m. in London.
Lehman lost three-quarters of its value last week amid signs that the U.S. government may not provide the funding that enabled Bear Stearns Cos. to sell itself and avoid bankruptcy.
``I could see Lehman's shares fall into the Fannie Mae and Freddie Mac range,'' said Dickson. Fannie Mae and Freddie Mac dropped below 75 cents a share after the government announced plans to put the two largest mortgage-finance companies under conservatorship.
Bailout Costs
Washington Mutual may cost taxpayers as much as $24 billion in the event of a U.S. government bailout, Richard Bove, an analyst at Ladenburg Thalmann & Co., said. The federal government may have to provide that much in mortgage guarantees in order to attract a buyer for the Seattle-based bank, Bove said.
``You may get an assisted merger with a limit on how much the private buyer would pay for the bank with the government giving a guarantee for the rest,'' Bove said in an interview with Bloomberg Radio.
Former Federal Reserve Chairman Alan Greenspan said the financial crisis that began with the collapse of the subprime- mortgage market last year ``is probably a once in a century event'' that will lead to the failure of more firms.
The S&P 500 Index rose 0.8 percent to 1,251.70 last week for the first advance since the week ended Aug. 15.
To contact the reporter on this story: Allen Wan in New York at awan3@bloomberg.net
By Allen Wan and Adria Cimino
Sept. 15 (Bloomberg) -- U.S. stock-index futures tumbled on concern Lehman Brothers Holdings Inc.'s bankruptcy filing will exacerbate credit-market turmoil.
Lehman, once the fourth-largest U.S. investment bank, has filed a Chapter 11 petition after potential buyers abandoned talks and the U.S. government declined to fund a takeover of the crippled firm. Bank of America Corp. cemented its status as the largest U.S. consumer bank by agreeing to acquire Merrill Lynch & Co., the world's biggest brokerage firm, for about $50 billion.
Standard & Poor's 500 Index futures expiring in December retreated 46.20 points, or 3.7 percent, to 1,212.4 at 9:58 a.m. in London. Stocks in Australia dropped and U.S. Treasuries rose the most since January as investors sought the relative safety of government debt.
``The collapse of this deal casts a dark cloud over Wall Street,'' said Frederic Dickson, who helps oversee $25 billion as chief market strategist at D.A. Davidson & Co. in Lake Oswego, Oregon. ``It also sends a message that the government is getting out of the bailout business and makes financial institutions like AIG and WaMu look even more vulnerable.''
American International Group Inc., the largest U.S. insurer, plunged 46 percent last week and Washington Mutual Inc., the country's biggest savings and loan, dropped 36 percent on concern about their financial health.
Emergency Session
Federal Reserve and U.S. Treasury officials met in an emergency session as Barclays, the U.K.'s third-largest bank, abandoned talks to acquire Lehman after failing to win government guarantees against losses. The companies were considered leading candidates to acquire the 158-year-old investment bank after record losses erased 94 percent of its stock value this year.
Lehman sank $2.6, or 81 percent, to 69 cents in Germany. Other U.S. banks also fell, with JPMorgan Chase & Co. losing $3.2, or 7.5 percent, to $38.05 in Germany.
Merrill climbed $6.89, or 40 percent, to $23.94 in Germany, while Bank of America lost $4.80 to $29.94 in Germany.
Bank of America will swap 0.8595 shares of its stock for each Merrill share. The bank pulled out of talks yesterday to acquire Lehman. That works out to $29 a share, based on Bank of America's closing price of $33.74 on Sept. 12.
AIG shares lost $3.11, or 26 percent, to $9.03 in Germany. The largest U.S. insurer by assets was working on plans late yesterday to raise capital and sell units to forestall credit downgrades from hobbling the company.
Australian Shares
Australia's S&P/ASX 200 Index slumped 86.1 points, or 1.8 percent, to 4,817.70 in Sydney. Stock markets in Japan, Korea, Hong Kong and China are closed for holidays today.
The yield on two-year notes dropped 34 basis points, or 0.34 percentage point, to 1.87 percent as of 7:23 a.m. in London, according to bond broker BGCantor Market Data. The dollar declined to $1.4481, the lowest since Sept. 4, before trading at $1.4401 per euro at 7:05 a.m. in London.
Lehman lost three-quarters of its value last week amid signs that the U.S. government may not provide the funding that enabled Bear Stearns Cos. to sell itself and avoid bankruptcy.
``I could see Lehman's shares fall into the Fannie Mae and Freddie Mac range,'' said Dickson. Fannie Mae and Freddie Mac dropped below 75 cents a share after the government announced plans to put the two largest mortgage-finance companies under conservatorship.
Bailout Costs
Washington Mutual may cost taxpayers as much as $24 billion in the event of a U.S. government bailout, Richard Bove, an analyst at Ladenburg Thalmann & Co., said. The federal government may have to provide that much in mortgage guarantees in order to attract a buyer for the Seattle-based bank, Bove said.
``You may get an assisted merger with a limit on how much the private buyer would pay for the bank with the government giving a guarantee for the rest,'' Bove said in an interview with Bloomberg Radio.
Former Federal Reserve Chairman Alan Greenspan said the financial crisis that began with the collapse of the subprime- mortgage market last year ``is probably a once in a century event'' that will lead to the failure of more firms.
The S&P 500 Index rose 0.8 percent to 1,251.70 last week for the first advance since the week ended Aug. 15.
To contact the reporter on this story: Allen Wan in New York at awan3@bloomberg.net
Wall Street awakes to 2 storied firms gone
Monday September 15, 3:15 am ET By Joe Bel Bruno, Christopher S. Rugaber and Martin Crutsinger, AP Business Writers
2 storied Wall Street firms vanish as US financial markets roiled by further shock waves
NEW YORK (AP) -- When Wall Street woke up Monday morning, two more of its storied firms had vanished.
Lehman Brothers, burdened by $60 billion in soured real-estate holdings, said it is filing for Chapter 11 bankruptcy after attempts to rescue the 158-year-old firm failed.
Bank of America Corp. said it is snapping up Merrill Lynch & Co. Inc. in an $50 billion all-stock transaction.
The demise of the independent Wall Street institutions came as shock waves from the 14-month-old credit crisis roiled the U.S. financial system six months after the collapse of Bear Stearns.
The world's largest insurance company, American International Group Inc., also was forced into a restructuring.
And a global consortium of banks, working with government officials in New York, announced a $70 billion pool of funds to lend to troubled financial companies.
The aim, according to participants who spoke to The Associated Press, was to prevent a worldwide panic on stock and other financial exchanges.
Ten banks -- Bank of America, Barclays, Citibank, Credit Suisse, Deutsche Bank, Goldman Sachs, JP Morgan, Merrill Lynch, Morgan Stanley and UBS -- each agreed to provide $7 billion "to help enhance liquidity and mitigate the unprecedented volatility and other challenges affecting global equity and debt markets."
The Federal Reserve also chipped in with more largesse in its emergency lending program for investment banks. The central bank announced late Sunday that it was broadening the types of collateral that financial institutions can use to obtain loans from the Fed.
Federal Reserve Chairman Ben Bernanke said the discussions had been aimed at identifying "potential market vulnerabilities in the wake of an unwinding of a major financial institution and to consider appropriate official sector and private sector responses."
Futures pegged to the Dow Jones industrial average fell more than 250 points in electronic
trading Sunday evening, pointing to a sharply lower open for the blue chip index Monday morning. Asian stock markets also tumbled, with India's Sensex sinking more than 5 percent. Japan and Hong Kong were closed for holidays.
The stunning weekend developments took place as voters, who rank the economy as their top concern, prepare to elect a new president in seven weeks. It likely will spur a much greater focus by presidential candidates -- Republican John McCain and Democrat Barack Obama -- and members of Congress on the need for stricter financial regulation.
Samuel Hayes, finance professor emeritus at Harvard Business School, said the Bush administration may get a lot of blame for the situation, which could benefit Obama.
"Just the psychological impact of this kind of failure is going to be significant," he said. "It will color people's feelings about their well-being and the integrity of the financial system."
Lehman Brothers' announcement that it is filing for bankruptcy came after all potential buyers walked away. Potential suitors were spooked by the U.S. Treasury's refusal to provide any takeover aid, as it had done six months ago when Bear Stearns faltered and earlier this month when it seized Fannie Mae and Freddie Mac.
Employees emerging from Lehman's headquarters near the heart of Times Square Sunday night carried boxes, tote bags and duffel bags, rolling suitcases, framed artwork and spare umbrellas. Many were emblazoned with the Lehman Brothers name.
TV trucks lined Seventh Avenue opposite the building, while barricades at the building's main entrance attempted to keep workers and onlookers from gumming up the steady flow of pedestrians flowing in and out of Times Square.
Some workers had moist eyes while a few others wept and shared hugs. Most who left the building quietly declined interviews.
People snapped pictures with cameras and their phones. Observers pressed up against a police barricade drew the ire of one man who emerged from the building and shouted: "Are you enjoying watching this? You think this is funny?"
Merrill Lynch, another investment bank laid low by the crisis that was triggered by rising mortgage defaults and plunging home values in the U.S., agreed to be acquired by Bank of America for 0.8595 shares of Bank of America common stock for each Merrill Lynch common share.
That values Merrill at $29 a share, a 70 percent premium over the brokerage's Friday closing price of $17.05, but well below what Merrill was worth at its peak in early 2007, when its shares traded above $98.
Charlotte, N.C.,-based Bank of America has the most deposits of any U.S. bank, while Merrill Lynch is the world's largest brokerage. A combination of the two would create a global financial giant to rival Citigroup Inc., the biggest U.S. bank in terms of assets.
Strategically, most industry analysts say it's a good fit. If the deal goes according to plan, Bank of America will be able to offer Merrill's retail brokerage services to its huge customer base. There is not a great deal of overlap between the two companies -- Bank of America does have an investment bank already, but it has never been terribly strong.
Where there is duplication, however, the combination of the two companies could result in more layoffs. Both Merrill and Bank of America have already cut thousands of investment banking jobs over the past year.
The deal would not come without risks, however. Merrill Lynch, like many of its Wall Street peers, has been struggling with tight credit markets and billions of dollars in assets tied to mortgages that have plunged in value. Merrill has reported four straight quarterly losses.
Bank of America's own finances are far from robust. As consumer credit deteriorates, the bank has seen its profits decline, and the company is still in the midst of absorbing the embattled mortgage lender Countrywide Financial, which it acquired in January.
Insurer AIG, hit hard by deterioration in the credit markets, said Sunday it is reviewing its operations and discussing possible options with outside parties to improve its business after a week when its stock dropped 45 percent amid concerns about the company's financial underpinnings. It was working with New York Insurance Superintendent Eric Dinallo and a representative of the governor's office through the weekend to craft a solution that protects policyholders, according to Dinallo's spokesman David Neustadt.
"It's clear we're one step away from a financial meltdown," said Nouriel Roubini, chairman of the consulting firm RGE Monitor.
The meetings that began Friday night were a who's who of financial heavyweights: Treasury Secretary Hank Paulson, Timothy Geithner, president of the New York Fed, Securities and Exchange Commission Chairman Christopher Cox, and a host of CEOs, including Vikram Pandit of Citigroup Inc., Jamie Dimon of JPMorgan Chase & Co., John Mack of Morgan Stanley, Lloyd Blankfein of Goldman Sachs Group Inc., and Merrill Lynch & Co.'s John Thain.
For all their efforts, Lehman appeared ready to file for bankruptcy.
The end of Lehman may not stop the financial crisis that has gripped Wall Street for months, analysts said. More investment banks could disappear soon.
The independent broker-dealers "are going the way of the dodo bird," said Bert Ely, an Alexandria, Va.,-based banking consultant.
That's partly because some of the firms, particularly Merrill, made bad bets on real estate. But several analysts said that investment companies will need the deep pockets of commercial banks to survive the next few years.
On Sunday, there was also an emergency trading session being held at the International Swaps and Derivatives Association to "reduce risk associated with a potential Lehman Brothers Holdings Inc. bankruptcy." The ISDA, which arranges trades for derivatives, said it was allowing customers to make trades and unwind positions linked to Lehman.
Roubini said it's difficult to accurately gauge the health of companies like Merrill because their financial health depends on how they value complex securities. As a result, their finances aren't very transparent, he said.
That can lead to a loss of confidence in the financial markets, he said, which can overwhelm an investment bank even if it is financially healthy by some measures.
"Once you lose confidence, the fundamentals matter less," he said.
The common denominator of the financial crisis, analysts said, is the bursting of the housing bubble. Home prices have dropped on average 25 percent so far. Roubini predicted they could drop another 15 percent.
The crisis has begun to slow the broader economy as banks make fewer loans and consumers have begun cutting spending. Many economists are now forecasting that the economy could slip into recession by the end of this year and early next year.
That, in turn, could cause additional losses for commercial banks on credit cards, auto loans and student loans.
The Fed is widely expected to keep interest rates steady at 2 percent, below inflation, when it meets Tuesday. It was possible, however, that the central bank might decide in coming weeks to cut rates if such a move is seen as needed to calm turbulent financial markets.
The International Monetary Fund predicted earlier this year that total losses from the credit crisis could reach almost $1 trillion. So far, banks have only taken about $350 billion in losses.
Commercial banks are also starting to feel the pinch. Eleven have closed so far this year, including Pasadena, Calif.-based IndyMac Bank, which had $32 billion in assets and $19 billion in deposits.
Christopher Whalen, managing director of Institutional Risk Analytics, a research firm, predicts that approximately 110 banks with $850 billion in assets could close by next July. That's out of 8,400 federally insured institutions, he said, which together hold $13 trillion in assets.
Individual customers are starting to get nervous about the financial health of their banks for the first time in generations, he said. Whalen's firm analyzes the safety and soundness of banks for business clients, but began receiving inquiries from individuals in the past two months for the first time, he said.
"If we don't get ahead of this, we are going to face a run on the retail banks by election day," he said.
AP Business Writers Madlen Read, Tim Paradis and Stephen Bernard in New York, Martin Crutsinger in Washington, Ieva Augstums in Charlotte and Michael Liedtke in San Francisco contributed to this report.
2 storied Wall Street firms vanish as US financial markets roiled by further shock waves
NEW YORK (AP) -- When Wall Street woke up Monday morning, two more of its storied firms had vanished.
Lehman Brothers, burdened by $60 billion in soured real-estate holdings, said it is filing for Chapter 11 bankruptcy after attempts to rescue the 158-year-old firm failed.
Bank of America Corp. said it is snapping up Merrill Lynch & Co. Inc. in an $50 billion all-stock transaction.
The demise of the independent Wall Street institutions came as shock waves from the 14-month-old credit crisis roiled the U.S. financial system six months after the collapse of Bear Stearns.
The world's largest insurance company, American International Group Inc., also was forced into a restructuring.
And a global consortium of banks, working with government officials in New York, announced a $70 billion pool of funds to lend to troubled financial companies.
The aim, according to participants who spoke to The Associated Press, was to prevent a worldwide panic on stock and other financial exchanges.
Ten banks -- Bank of America, Barclays, Citibank, Credit Suisse, Deutsche Bank, Goldman Sachs, JP Morgan, Merrill Lynch, Morgan Stanley and UBS -- each agreed to provide $7 billion "to help enhance liquidity and mitigate the unprecedented volatility and other challenges affecting global equity and debt markets."
The Federal Reserve also chipped in with more largesse in its emergency lending program for investment banks. The central bank announced late Sunday that it was broadening the types of collateral that financial institutions can use to obtain loans from the Fed.
Federal Reserve Chairman Ben Bernanke said the discussions had been aimed at identifying "potential market vulnerabilities in the wake of an unwinding of a major financial institution and to consider appropriate official sector and private sector responses."
Futures pegged to the Dow Jones industrial average fell more than 250 points in electronic
trading Sunday evening, pointing to a sharply lower open for the blue chip index Monday morning. Asian stock markets also tumbled, with India's Sensex sinking more than 5 percent. Japan and Hong Kong were closed for holidays.
The stunning weekend developments took place as voters, who rank the economy as their top concern, prepare to elect a new president in seven weeks. It likely will spur a much greater focus by presidential candidates -- Republican John McCain and Democrat Barack Obama -- and members of Congress on the need for stricter financial regulation.
Samuel Hayes, finance professor emeritus at Harvard Business School, said the Bush administration may get a lot of blame for the situation, which could benefit Obama.
"Just the psychological impact of this kind of failure is going to be significant," he said. "It will color people's feelings about their well-being and the integrity of the financial system."
Lehman Brothers' announcement that it is filing for bankruptcy came after all potential buyers walked away. Potential suitors were spooked by the U.S. Treasury's refusal to provide any takeover aid, as it had done six months ago when Bear Stearns faltered and earlier this month when it seized Fannie Mae and Freddie Mac.
Employees emerging from Lehman's headquarters near the heart of Times Square Sunday night carried boxes, tote bags and duffel bags, rolling suitcases, framed artwork and spare umbrellas. Many were emblazoned with the Lehman Brothers name.
TV trucks lined Seventh Avenue opposite the building, while barricades at the building's main entrance attempted to keep workers and onlookers from gumming up the steady flow of pedestrians flowing in and out of Times Square.
Some workers had moist eyes while a few others wept and shared hugs. Most who left the building quietly declined interviews.
People snapped pictures with cameras and their phones. Observers pressed up against a police barricade drew the ire of one man who emerged from the building and shouted: "Are you enjoying watching this? You think this is funny?"
Merrill Lynch, another investment bank laid low by the crisis that was triggered by rising mortgage defaults and plunging home values in the U.S., agreed to be acquired by Bank of America for 0.8595 shares of Bank of America common stock for each Merrill Lynch common share.
That values Merrill at $29 a share, a 70 percent premium over the brokerage's Friday closing price of $17.05, but well below what Merrill was worth at its peak in early 2007, when its shares traded above $98.
Charlotte, N.C.,-based Bank of America has the most deposits of any U.S. bank, while Merrill Lynch is the world's largest brokerage. A combination of the two would create a global financial giant to rival Citigroup Inc., the biggest U.S. bank in terms of assets.
Strategically, most industry analysts say it's a good fit. If the deal goes according to plan, Bank of America will be able to offer Merrill's retail brokerage services to its huge customer base. There is not a great deal of overlap between the two companies -- Bank of America does have an investment bank already, but it has never been terribly strong.
Where there is duplication, however, the combination of the two companies could result in more layoffs. Both Merrill and Bank of America have already cut thousands of investment banking jobs over the past year.
The deal would not come without risks, however. Merrill Lynch, like many of its Wall Street peers, has been struggling with tight credit markets and billions of dollars in assets tied to mortgages that have plunged in value. Merrill has reported four straight quarterly losses.
Bank of America's own finances are far from robust. As consumer credit deteriorates, the bank has seen its profits decline, and the company is still in the midst of absorbing the embattled mortgage lender Countrywide Financial, which it acquired in January.
Insurer AIG, hit hard by deterioration in the credit markets, said Sunday it is reviewing its operations and discussing possible options with outside parties to improve its business after a week when its stock dropped 45 percent amid concerns about the company's financial underpinnings. It was working with New York Insurance Superintendent Eric Dinallo and a representative of the governor's office through the weekend to craft a solution that protects policyholders, according to Dinallo's spokesman David Neustadt.
"It's clear we're one step away from a financial meltdown," said Nouriel Roubini, chairman of the consulting firm RGE Monitor.
The meetings that began Friday night were a who's who of financial heavyweights: Treasury Secretary Hank Paulson, Timothy Geithner, president of the New York Fed, Securities and Exchange Commission Chairman Christopher Cox, and a host of CEOs, including Vikram Pandit of Citigroup Inc., Jamie Dimon of JPMorgan Chase & Co., John Mack of Morgan Stanley, Lloyd Blankfein of Goldman Sachs Group Inc., and Merrill Lynch & Co.'s John Thain.
For all their efforts, Lehman appeared ready to file for bankruptcy.
The end of Lehman may not stop the financial crisis that has gripped Wall Street for months, analysts said. More investment banks could disappear soon.
The independent broker-dealers "are going the way of the dodo bird," said Bert Ely, an Alexandria, Va.,-based banking consultant.
That's partly because some of the firms, particularly Merrill, made bad bets on real estate. But several analysts said that investment companies will need the deep pockets of commercial banks to survive the next few years.
On Sunday, there was also an emergency trading session being held at the International Swaps and Derivatives Association to "reduce risk associated with a potential Lehman Brothers Holdings Inc. bankruptcy." The ISDA, which arranges trades for derivatives, said it was allowing customers to make trades and unwind positions linked to Lehman.
Roubini said it's difficult to accurately gauge the health of companies like Merrill because their financial health depends on how they value complex securities. As a result, their finances aren't very transparent, he said.
That can lead to a loss of confidence in the financial markets, he said, which can overwhelm an investment bank even if it is financially healthy by some measures.
"Once you lose confidence, the fundamentals matter less," he said.
The common denominator of the financial crisis, analysts said, is the bursting of the housing bubble. Home prices have dropped on average 25 percent so far. Roubini predicted they could drop another 15 percent.
The crisis has begun to slow the broader economy as banks make fewer loans and consumers have begun cutting spending. Many economists are now forecasting that the economy could slip into recession by the end of this year and early next year.
That, in turn, could cause additional losses for commercial banks on credit cards, auto loans and student loans.
The Fed is widely expected to keep interest rates steady at 2 percent, below inflation, when it meets Tuesday. It was possible, however, that the central bank might decide in coming weeks to cut rates if such a move is seen as needed to calm turbulent financial markets.
The International Monetary Fund predicted earlier this year that total losses from the credit crisis could reach almost $1 trillion. So far, banks have only taken about $350 billion in losses.
Commercial banks are also starting to feel the pinch. Eleven have closed so far this year, including Pasadena, Calif.-based IndyMac Bank, which had $32 billion in assets and $19 billion in deposits.
Christopher Whalen, managing director of Institutional Risk Analytics, a research firm, predicts that approximately 110 banks with $850 billion in assets could close by next July. That's out of 8,400 federally insured institutions, he said, which together hold $13 trillion in assets.
Individual customers are starting to get nervous about the financial health of their banks for the first time in generations, he said. Whalen's firm analyzes the safety and soundness of banks for business clients, but began receiving inquiries from individuals in the past two months for the first time, he said.
"If we don't get ahead of this, we are going to face a run on the retail banks by election day," he said.
AP Business Writers Madlen Read, Tim Paradis and Stephen Bernard in New York, Martin Crutsinger in Washington, Ieva Augstums in Charlotte and Michael Liedtke in San Francisco contributed to this report.
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