The 138 year old Wall Street investment bank Lehman Brothers is filing for CH 11 (liquidation – as in it is gone forever) tonite.
The SEC Chairman, the Secretary of the Treasury, and (via remote) the Fed Chairman spent the entire weekend again playing the role of Monte Hall, trying desperately to broker a sale of the bank to anyone.
Inside sources have said that the problem with the sale was the insistance of Barklay's Bank that they get the same sort of sweetheart deal ($29BB in loan guarantees or more) that the US Government gave to JP Morgan when they took over Bear Stearns recently.
They also wanted the building for free (well, okay, I made that part up)
Overseas indexes and futures trading are now indicating a minimum 400 point drop on the DJIA in the morning.
The ripple effect from this will have a massive impact on every commercial bank stock and brokerage company.
Be prepared for a second Black Monday.
White house officials have announced that President Bush is planning to fly over Wall Street in Air Force One to survey the damage.
(okay, okay…I made that up too)
NOTE FROM PAM: Barack Obama's response to this serious news is below the fold.
I wonder if the McCain/Palin campaign will have an optimistic press release out ASAP. Meanwhile, here's Barack Obama's reality-based response:
“This morning we woke up to some very serious and troubling news from Wall Street.
“The situation with Lehman Brothers and other financial institutions is the latest in a wave of crises that are generating enormous uncertainty about the future of our financial markets. This turmoil is a major threat to our economy and its ability to create good-paying jobs and help working Americans pay their bills, save for their future, and make their mortgage payments.
“The challenges facing our financial system today are more evidence that too many folks in Washington and on Wall Street weren’t minding the store. Eight years of policies that have shredded consumer protections, loosened oversight and regulation, and encouraged outsized bonuses to CEOs while ignoring middle-class Americans have brought us to the most serious financial crisis since the Great Depression.
“I certainly don’t fault Senator McCain for these problems, but I do fault the economic philosophy he subscribes to. It’s a philosophy we’ve had for the last eight years – one that says we should give more and more to those with the most and hope that prosperity trickles down to everyone else. It’s a philosophy that says even common-sense regulations are unnecessary and unwise, and one that says we should just stick our heads in the sand and ignore economic problems until they spiral into crises.
“Well now, instead of prosperity trickling down, the pain has trickled up – from the struggles of hardworking Americans on Main Street to the largest firms of Wall Street.
“This country can’t afford another four years of this failed philosophy. For years, I have consistently called for modernizing the rules of the road to suit a 21st century market – rules that would protect American investors and consumers. And I’ve called for policies that grow our economy and our middle-class together. That is the change I am calling for in this campaign, and that is the change I will bring as President,” said Senator Barack Obama.