By Kyle Austin
All eyes are fixed on Wall Street this morning and the Wall Street Journal. In what may have been the wildest 48 hours in the last few decades, Merrill Lynch & Co. agreed to be sold to Bank of America for $29 a share, or $50 billion and Lehman Brothers Holdings Inc. filed for bankruptcy protection.
Meanwhile, insurance giant A.I.G reached out to the federal reserve for $40 billion as people close to the situation maintained that it only has days left to survive.
So how did the events transpire? Adrew Ross Sorkin of the New York Times has some insight (The WSJ isn’t the only one with good financial reporters):
“The weekend that humbled Lehman and Merrill Lynch and rewarded Bank of America, based in Charlotte, N.C., began at 6 p.m. Friday in the first of a series of emergency meetings at the Federal Reserve building in Lower Manhattan.
The meeting was called by Fed officials, with Treasury Secretary Henry M. Paulson Jr. in attendance, and it included top bankers. The Treasury and Federal Reserve had already stepped in on several occasions to rescue the financial system, forcing a shotgun marriage between Bear Stearns and JPMorgan Chase this year and backstopping $29 billion worth of troubled assets — and then agreeing to bail out Fannie Mae and Freddie Mac.
The bankers were told that the government would not bail out Lehman and that it was up to Wall Street to solve its problems. Lehman’s stock tumbled sharply last week as concerns about its financial condition grew and other firms started to pull back from doing business with it, threatening its viability.”
In early morning trading the Dow has sunk more then 300 points.