What happened to Lehman Brothers and Merrill Lynch?
Lehman Brothers, the 158-year-old Wall Street firm, filed for bankruptcy as a result of an unsuccessful quest to find a buyer. Meanwhile, Bank of America is taking over Merrill Lynch, one of the largest Wall Street brokerages. Bank of America agreed to purchase the firm for $50 billion in an all-stock transaction. Both Lehman and Merrill suffered large losses in the past year from mortgage-related investments that lost value as home values declined. What happened to Lehman’s search for a buyer? Reports indicate that companies that were weighing whether to purchase Lehman Brothers got cold feet when they learned that the government would only facilitate discussions and wouldn’t commit any cash to help save Wall Street firms. The Treasury Department and the Federal Reserve engineered the sale of Bear Stearns to JPMorgan Chase in March by guaranteeing some of Bear Stearns’ debt as an incentive for the purchase to go through quickly. In the case of Bear Stearns, the government put nearly $
