September 15, 2008
The Federation of Connecticut Taxpayer Organizations, Inc. (FCTO)
Contact: Susan Kniep,
President
Website: http://ctact.org/
email: fctopresident@aol.com
860-524-6501
September 15, 2008
VOTERS UNITE. VOTE YES ON NOV 4, 2008.
For a
CONSTITUTIONAL CONVENTION!
*********************
BLOOMBERG NEWS
RELEASE
U.S. Stocks Decline as Lehman Bankruptcy Deepens
Market Turmoil Sept. 15 (Bloomberg) -- U.S.
stocks tumbled, erasing more than $300 billion in market
value, as Lehman
Brothers Holdings Inc.'s bankruptcy fueled speculation
credit-market turmoil will deepen.
Lehman plunged 95 percent after the 158-year-old investment bank's subprime mortgage losses pushed it into the biggest Chapter
11 filing. American
International Group Inc. retreated 42 percent on funding
concerns, while Bank of America Corp. slumped 14 percent after agreeing to buy Merrill
Lynch & Co. for $50 billion. Exxon Mobil Corp. and Valero
Energy Corp. sent energy shares to a 3.7 percent retreat as oil fell below $95
a barrel.
***********************
RELEASE
FROM THE NEW YORK TIMES
Lehman Will File for
Bankruptcy; Merrill to Be Sold By Andrew Ross Sorkin,
September 14, 2008
This article was
reported by Jenny Anderson, Eric Dash and Andrew Ross Sorkin
and was written by Mr. Sorkin.
Jin Lee/Bloomberg
News
Related
5 Days of Pressure, Fear and Ultimately, Failure
(September 16, 2008)
Stunning Fall for Main Street’s
Brokerage Firm (September 15, 2008)
Purchase of Merrill Fulfills Quest for a Bank
(September 15, 2008)
Banks Fear Next Move by Shorts (September 15,
2008)
Fed Loosens Standards on Emergency Loans
(September 15, 2008)
Times Topics: Lehman Brothers | Merrill Lynch
DealBook: The Struggle at Lehman
Statement: Federal
Reserve Board
In one of the most
dramatic days in Wall Street’s history, Merrill Lynch agreed to sell itself on Sunday
to Bank of America for roughly $50 billion to
avert a deepening financial crisis, while another prominent securities firm, Lehman Brothers, filed for bankruptcy
protection and hurtled toward liquidation after it failed to find a buyer.
The humbling moves,
which reshape the landscape of American finance, mark the latest chapter in a
tumultuous year in which once-proud financial institutions have been brought to
their knees as a result of hundreds of billions of dollars in losses because of
bad mortgage finance and real estate investments.
But even as the fates
of Lehman and Merrill hung in the balance, another crisis loomed as the
insurance giant American International Group appeared to
teeter. Staggered by losses stemming from the credit crisis, A.I.G. sought a
$40 billion lifeline from the Federal Reserve, without which the company may
have only days to survive.
The stunning series
of events culminated a weekend of frantic around-the-clock negotiations, as
Wall Street bankers huddled in meetings at the behest of Bush administration
officials to try to avoid a downward spiral in the markets stemming from a
crisis of confidence.
“My
goodness. I’ve been in the
business 35 years, and these are the most extraordinary events I’ve ever seen,”
said Peter G. Peterson, co-founder of the private
equity firm the Blackstone Group, who was head of Lehman in
the 1970s and a secretary of commerce in the Nixon administration.
It remains to be seen
whether the sale of Merrill, which was worth more than $100 billion during the
last year, and the controlled demise of Lehman will be enough to finally turn
the tide in the yearlong financial crisis that has crippled Wall Street and
threatened the broader economy.
Early Monday morning,
Lehman said it would file for Chapter 11 bankruptcy protection in New York for
its holding company in what would be the largest failure of an investment bank
since the collapse of Drexel Burnham Lambert 18 years ago, the Associated Press
reported.
Questions remain
about how the market will react Monday, particularly to Lehman’s plan to wind
down its trading operations, and whether other companies, like A.I.G. and Washington Mutual, the nation’s largest
savings and loan, might falter.
Indeed, in a move
that echoed Wall Street’s rescue of a big hedge fund a decade ago this week, 10
major banks agreed to create an emergency fund of $70 billion to $100 billion
that financial institutions can use to protect themselves from the fallout of
Lehman’s failure.
The Fed, meantime,
broadened the terms of its emergency loan program for Wall Street banks, a move
that could ultimately put taxpayers’ money at risk.
Though the government
took control of the troubled mortgage finance companies Fannie Mae and Freddie Mac only a week ago, investors have
become increasingly nervous about whether major financial institutions can
recover from their losses.
How things play out
could affect the broader economy, which has been weakening steadily as the
financial crisis has deepened over the last year, with unemployment increasing
as the nation’s growth rate has slowed.
What will happen to
Merrill’s 60,000 employees or Lehman’s 25,000 employees remains unclear.
Worried about the unfolding crisis and its potential impact on New York City’s
economy, Mayor Michael R. Bloomberg canceled a trip to
California to meet with Gov. Arnold Schwarzenegger. Instead, aides said,
Mr. Bloomberg spent much of the weekend working the phones, talking to federal
officials and bank executives in an effort to gauge the severity of the crisis.
The weekend that
humbled Lehman and Merrill Lynch and rewarded Bank of America, based in
Charlotte, N.C., began at 6 p.m. Friday in the first of a series of emergency
meetings at the Federal Reserve building in Lower Manhattan.
The meeting was
called by Fed officials, with Treasury Secretary Henry M. Paulson Jr. in attendance, and it
included top bankers. The Treasury and Federal Reserve had already stepped in
on several occasions to rescue the financial system, forcing a shotgun marriage
between Bear Stearns and JPMorgan Chase this year and backstopping $29 billion
worth of troubled assets — and then agreeing to bail out Fannie Mae and Freddie
Mac.
Click the following
to continue….. http://www.nytimes.com/2008/09/15/business/15lehman.html?_r=1&partner=rssnyt&emc=rss&oref=slogin