Only two left.....with Lehman filing for bankruptcy, and Merrill being acquired by BofA. And of course Bear Sterns was acquired by JP Morgan in the Spring.
I feel bad saying this but I am experiencing a serious bout of schadenfreude. I realize many people at these firms had nothing to do with getting us into the current meltdown (i.e. the admin staff). But I can't help but feel that these firms and their employees were among the primary enablers. These folks with their MBAs and Ivy League degrees were supposed to "know better." They were supposed to correctly evaluate the risk and determine the appropriate actions. All the while, they were making ridiculous sums of money (as all on Wall Street do, regardless of their competency).
I have many friends and family suffering various consequences of the housing meltdown (most all in unrelated industries). In my mind, it only seems appropriate that Wall Street should also feel the consequences of its failings (beyond a reduction in their 6 figure annual bonus).
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And Lehman Bros. gives us another harsh reminder to not invest your retirement money (401k, etc.) in your employer. Lehman was substantially an employee owned company with many lifetime employees fully vested in Lehman stock.
For years the SEC limited the Wall Street banks to a leverage ratio of about 15:1, but for reasons I haven't yet learned, in 2004, the SEC eliminated the rule and Lehman, and others, ran their leverages up to +30:1.
Lehman still holds a massive portfolio of residential real estate mortgages of various kinds, including many in default and many likely to default. The BK will make the situation interesting.
I'm just grateful the taxpayers didn't pick up the tab, directly, this time. (Although on Sunday the Feds did increase the borrowing window by $25b and expanded the acceptable collateral to include equities ... all at our potential expense.)
expanded the acceptable collateral to include equities
This was particularly interesting to me, being a violation of the Federal Reserve Act which the Fed took it upon themselves (with no authority) to create an exemption for.
I often wonder if "Schadenfreud" could describe some of the bubble bloggers out there, but not on this one.
There is a bright spot today, looks like the state may finally have a budget...
There is a bright spot today, looks like the state may finally have a budget...
I'll drink to that :)
Do we even need a budget? We seem to be spending money fine w/o one and we never stick to it anyway...
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