Today Lehman Brothers filed for the largest bankruptcy in US history. The investment firm had a 158-year existence, starting as a profiteer of US slavery (the Southern cotton trade). Lehman was heavily invested in Credit Default Swaps (see 4-1-08 post).
Bank of America, which earlier this year bought failing Countrywide mortgage, also purchased Merrill Lynch. The demise of Lehman Brothers and Merrill Lynch means an additional 50,000 financial workers may lose their jobs. Other US investment banks are said to be unstable.
AIG, the US' largest insurance company is also in financial turmoil, with its stock value decreasing by 68%. AIG was also highly invested in credit default swaps. The insurance company may be looking for help from the Federal Reserve Bank. The Fed has reportedly asked two investment banks, JP Morgan Chase and Goldman Sachs, to lend AIG $70 billion. [Update: Tonight the Federal Reserve bailed out AIG with an $85 Billion dollar loan while reportedly taking control of 80% of the company's assets.]
In lesser news for the neoliberals, more than 24,000 workers at Hewlitt Packard will lose their jobs after taking over EDS. The mass firing increased HP's value.