There is news on Lehman Files For Bankruptcy, BofA To Buy Merrill

News from CNN, Date: 15th Sept. 2008

THE EVENTS: Two of Wall Streets' venerable investment giants have been brought to their knees - and an insurance powerhouse hangs by its fingertips. Lehman Brothers Holdings Inc. (LEH) filed for bankruptcy protection, while Merrill Lynch (MER) agreed to be acquired by Bank of America Corp. (BAC) for $50 billion.

Meanwhile, another victim of the ongoing credit and housing crunch, insurance giant American International Group Inc. (AIG), is desperately trying to raise capital.

MARKET REACTION:
Merrill shares gained 26% to $21.59 as investors expressed relief, but Bank of America fell 14% to $28.88. Lehman stock fell 95% to 19 cents a share and AIG dropped 47% to $6.34.
In the broader market, the Dow Jones Industrial Average was down 223 points at 11198, Nasdaq was off 26 at 2234 and the S&P 500 down 21 at 1230.
Treasurys soared as investors scrambled for safety.

The U.S. dollar was off its overnight lows after initial risk aversion moves.
Oil futures slid to a seven-month low as speculators fled for perceived safe havens amid turmoil on Wall Street.

Gold prices jumped nearly 3%.
European stock indexes were down 4% to 5%.
Equity indexes in Asia were off about 4% with the bourses in Japan, China and Hong Kong closed for holidays.

LEHMAN BROTHERS SEEKS PROTECTION: Wracked by massive real-estate-related losses, Lehman Brothers Monday filed for Chapter 11 protection after a feverish weekend of negotiations to attract a potential buyer. But the two most likely suitors, BofA and Barclays PLC (BCS), walked away after the U.S. government said it would not backstop Lehman's troubled assets to facilitate a sale.

Federal regulators assured Lehman brokerage customers that their accounts will be protected and transferred to other brokerage firms. Meanwhile, Lehman employees received few answers Monday about the status of their jobs. Thousands are expected to be laid off.

MERRILL ABSORBED AMID CRISIS: Merrill, in a rushed bid to ride out the storm sweeping Wall Street, agreed to be taken over by BofA in a $50 billion all-stock transaction. Through the weekend, federal officials strongly encouraged the deal, fearing Merrill would be the next financial house to approach the brink after Lehman.

AIG SEEKS CAPITAL: AIG - hobbled by credit default swap investments that have gone sour - spent the weekend trying to raise $40 billion to avoid a credit downgrade which would let counterparties pull their capital from deals with the firm. AIG Chief Executive Robert Willumstad made an extraordinary appeal to the Fed for temporary funding to tide it through the crisis.

WALL STREET CIRCLES THE WAGONS: Ten major commercial and investment banks announced Sunday they would pool $70 billion of their own money to create a borrowing facility that they could tap into to help them ride out the crisis.

U.S. TAKES STEPS TO SUPPORT FINANCIAL MARKETS: U.S. regulators Sunday announced a series of steps - including an expansion of the Federal Reserve's credit facilities - in hopes of stabilizing financial markets after a tumultuous weekend. The moves are designed to make it easier for banks to gain access to emergency credit.

WHAT THEY SAID:
Bank of America Chief Executive Ken Lewis said he felt "no pressure" from federal government regulators to acquire Merrill.

"Today we are looking forward. This weekend's discussions made clear that both market participants and regulators in this country and abroad recognize the need to support market stability and remove uncertainty as they address current challenges," Treasury Secretary Henry Paulson said.

"Monday will be a day of reckoning for the financial markets," said Carlos Mendez, senior managing director of ICP Capital.

------------------------------------------------------------------------------------------

Where in earth having so much money or Huge Capital for those failure banks to refinance their debts? can't US govt. help those banks or protect those banks?

I think to get out of this crisis must able to rise even more fund than those debts adding together that will over come the crisis. The Crisis is meet where the money is short of cash to run the businesses.

America has been number one for more than a centry. The number one are in their economy. are China able to over take it fast enough? are China meet with those standard that America alway meet.

Is there a greed and fear factor in the crisis?

Treasurys jump that cause Wall Street crisis escalates.

Has US crisis over?.....

U.S. debt had gains most since September 2001...

Treasurys jumped Monday, pushing yields down by the most since September 2001, as investors clamored for the safety of government debt in the wake of Lehman's bankruptcy, Merrill Lynch's demise and AIG's need for cash.

Two-year note yields dropped 37 basis points, or 0.37%, to 1.86%, the biggest decline since Sept. 17, the first day bonds traded after the terrorist attacks. The yield is the lowest since April.

"It's definitely an extraordinary set of circumstances and I don't know if it's a culmination," said Jason Brady, who helps oversee about $6 billion in fixed-income assets at Thornburg Investment Management. "There isn't a lot of hope that this is going to turn around anytime soon. People would rather own things they don't have to think about so are buying Treasurys."

Bank of America, which absorbed failing mortgage lender Countrywide earlier this year, agreed to buy Merrill Lynch in the hopes of preventing the demise of yet another Wall Street giant.

Lehman filed for Chapter 11 bankruptcy, ending the 158-year-old Wall Street firm's run and rattling the foundation of the global financial system.

"For markets, the question is whether the liquidation of Lehman's illiquid assets will force other dealers to mark down the value of their holdings, resulting in another wave of write-downs and fire-sales that could destabilize markets," said BMO Capital Markets analysts.

Analysts also note the economic ramifications of potentially thousands of layoffs from all four firms because of overlapping positions or attempts to streamline the business. And as financial firms tighten their belts, it will also likely mean less lending to individuals and businesses, slowing down economic activity even more.

Ten-year note yields, which move inversely to prices, dropped 19 basis points to 3.54%.

Interest-rate futures have jumped as traders almost fully expect the Federal Reserve to reduce its benchmark rate at its meeting tomorrow to 1.75% from 2% to make borrowing and lending more feasible for a battered financial system.

"We believe that the gravity of the situation requires a Fed ease of 50 basis points and a removal of the current 25 basis point premium of the discount rate" at which banks can borrow from the Fed directly, said T.J. Marta, income strategist at RBC Capital Markets. "Such a move would put the Fed 'ahead' of the market."

Futures also show an 80% chance of another quarter percentage point cut at the central bank's meeting on Oct. 31.

The Fed also expanded its loan programs for banks and other financial institutions "to mitigate the potential risks and disruptions to markets," Chairman Ben S. Bernanke said in a statement.

The news are from MarketWatch Date: 15th Sept. 2008

----------------------------------

Is US Dollar flooding the whole world? Since near to all most everything are rate in USD......
I guess US should be able to deal with the crisis it just because there isn't any other country that bigger than US economy...in other word if they can't no single one are able bail them out fast.

This will have to take a long time than expected with the many country finance strength.....