Monday, Sept 15, 2008
The second shock from Lehman Brothers’ crash is expected when Wall Street opens Monday, Sept. 15. The European Central Bank injected 30 billion to steady the markets, followed by the Bank of England, which earmarked 5 billion sterling to arrest the City’s slide.
The fourth biggest American investment bank, Lehman Brothers, filed for bankruptcy early Monday after Barclays and the Bank of America withdrew their bids to rescue the 158-year old banking institution and the federal government refused a bailout. A workforce of 25,000 remains jobless.
The Bank of America bought out the limping Merrill Lynch for app. $50 bn, but the American International Group Inc. (AIG), once the world’s largest insurer, is struggling to survive.
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Ten US and foreign banks set up a $70bn fund to save troubled companies.
The collapse of the three biggest names on Wall Street threatens to wipe out many billions of dollars from global pension funds and the banking and insurance industries in a worldwide chain reaction, which has been called the worst financial catastrophe in a century.
Tel Aviv fell sharply with other world markets after The US government and Federal Reserve failed in their efforts over the weekend to bring the financial landslide under control in time for Monday’s trading. Some firms linked to the failing banks may be rescued while others will have no option but to file for bankruptcy. Lehman Brothers’ UK business Pricewaterhouscoopers has been placed into administration.