Shocking Lehman Brothers' bankruptcy news sent financial earthquake around globe and pulled down financial stocks around the world. Stock markets tumbled in Europe and Asia on Monday the blow from Lehman's bankruptcy news. Europe's major central banks moved quickly to provide liquidity by pumping billions into the financially system.
Lehman, a 158-year-old Wall Street firm, on Monday filed for bankruptcy protection with the Bankruptcy Court of the Southern District of New York. The failure came as the fallout from the U.S. housing collapse and global credit crunch intensified more than a year after the problem fist surfaced.
Lehman said the filling would affect only the parent, Lehman Brothers Holdings, and that its subsidiaries would continue to operate and customers could make trades. It will continue business while it explores the sale of it's business units and other alternatives, Lehman Said.
The shocking news came after frenzied search for buyer falls short. During the last minutes negotiations over the weekend, potential acquires backed away from a deal and federal officials balked at committing taxpayer money to rescue the Wall Street titan.
Federal officials are anxious not to commit any more taxpayers fund after the massive bailout of mortgage giants Fannie Mae and Freddie Mac last week and the guarantees provided to facilitate the bailout of Bear Sterns last spring.
The bank was a fixed-income powerhouse and the largest mortgage underwriter. It was the third-largest U.S. Brokerage firm after Morgan Stanley and Goldman Sachc. Before the filing, it had total assets of $639 billion against total debts of $613 billion provided by more than 100,000 creditors.
Lehman enjoyed a lot of profit from its' mortgage business during the past housing booming. The same mortgage business ironically dragged the firm down as home prices slumped, foreclosure surged and the commercial real estate market cracked. Its latest quarter report revealed a net loss of almost $4 billion after more than $5 billion of new write-downs, mostly on soured mortgage exposure.
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2 comments:
This is a consequent of Wall Street firms greedily expanded their balance sheets through leveraging assets
Pownce
Unrealty: The end of Lehman may not stop the financial crisis that has gripped wall street for months
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