The Bear roars once again on Wall Street as two of the largest investment banks in the United States have failed. After a weekend of intense negotiations with the Federal Government and other investment houses slated as potential buyers, troubled brokerage house Lehman Brothers has announced it will file for Chapter 11 Bankruptcy protection after its fellow financial institutions all said “Thanks, but no thanks” to acquiring the doomed company. Across town, Merrill Lynch will meet with a somewhat better, having agreed to be acquired by Bank of America in a deal worth roughly $50 million.

All I have to say is that I leave New York for two weeks and the whole place goes to pot. Both of these companies managed enormous amounts of capital and seemed as untouchable, in the eyes of a lay-observer such as myself as any organization in the world.   Their swift declines, with hardly a moments notice, are a grim reminder of the historically volatile economy we’re facing.  

The speed at which these investment giants fell apart highlights the need not only for much more intense regulation of a financial industry that seems virtually incapable of even its own survival when left to run wild, but also better press scrutiny of the financial industry.   How can two multi-billion dollar companies, both of whom employ thousands of people, and, worse yet, both of whom underwrite deals that affect millions upon millions of people worldwide fall apart, virtually overnight, and have the mainstream press act like it’s essentially a surprise?  The answer lies in the enormous retainers both of these companies paid out to top law firms and public relations firms in order to make them look reliable and solvent when in truth they were anything but.

You can takepart by contacting your Representative and Senator to demand better, smarter regulation of the financial industry that provides more transparency to the general public.

LINKS:

Reuters: Wall Street Shaken by Lehman failure, Merrill sale

Wall Street Journal: Crisis on Wall Street as Lehman Totters, Merrill is Sold, AIG Seeks to Raise Cash

Bloomberg: Lehman files biggest bankruptcy case as suitors balk