Miserable March Monday?
Monday, March 17. The day after Bear Stearns agreed to a bailout, nominally by JP Morgan Chase. In reality, Uncle Sam was taking all the risk, while Jamie Dimon was signing up for the (eventual) rewards. Not this time.
Lehman Brothers lost a quarter of its value on that March Monday. Tomorrow, Lehman will be gone. Eventually liquidated. This time, Uncle Sam wasn’t willing to provide a backstop to wouldbe Lehman suitors Barclays or Bank of America.
Bank of America walked away from Lehman, but wasted no time in signing up today to take over (once) mighty Merrill Lynch. Apparently Merrill saw the writing on the wall, and decided to hitch its wagon to a stronger horse. One hopefully strong enough to make it through this mess.
Will Goldman Sachs and Morgan Stanley be the only independent investment banks left standing? What’s to come with AIG? Will insurers soon be pulling up to the grand opening of the Federal Reserve Bank’s “major insurer credit facility” branch? And what’s Citi’s next move?
Tomorrow is not going to be pretty. If you thought Monday, March 17 was ugly, brace yourself. Because I think Monday, September 15 is going to be downright nightmarish.
Why allow Lehman Brothers fail and save Bear Stearns?? Asleep at the switch.