Troubles At Lehman Brothers, Washington Mutual Further Rattle Wall Street
Friday, September 12, 2008
Turbulence in the American and global investment banking industries became increasingly shaky this week as another Wall Street giant, Lehman Brothers, teetered on the verge of collapse. As one of the nation's largest and oldest investment banks scrambles to avert financial disaster by finding a suitable buyer before time runs out, Wall Street and investors across the world nervously await good news.
Rumors of a possible "white-knight" takeover by suitors including Bank of America and British bank Barclays are providing a glimmer of hope, but the future of the beleaguered firm and the fall out from such a move remain uncertain.
Meanwhile, the nation's broadening financial crisis, spurred by the mortgage meltdown, continues to threaten more victims, including Washington Mutual. The nation's largest savings and loan has seen its market value drop, including a 34% plummet this week, and is rumored to be in talks to be acquired by JP Morgan Chase.
Lehman Troubles Lead the Pack
The financial troubles at the venerable, 158-year-old Lehman Brothers have sent shock waves throughout the global and American financial markets. Lehman shares have been evaporating for weeks, posting double-digit drops as investors speculated on the fate of the firm. As credit downgrades and questions mount, Lehman has gone into a freefall.
Skittish investors around the world are now pinning their hopes on a Bank of America rescue.
Lehman Brothers Collapse Could Have Many Victims
Investors who have their money tucked away in a handful of Wall Street firms heavily invested in Lehman Brothers stock stand as likely losers in the ongoing financial saga surrounding the investment bank.
AllianceBernstein, a New York-based investment unit of France's Axa SA, is still reeling from big losses suffered by its holdings of top lenders Fannie Mae and Freddie Mac. AllianceBernstein recently had 65.6 million Lehman shares, amounting to a 9.5% stake in the now-troubled brokerage firm.
Other big holders of Lehman stock who could suffer include ClearBridge Advisors and Fidelity Investments, each with 5.6% of Lehman shares.
Washington Mutual, Other Financials Struggling
As Lehman Brothers continues its search for a suitable buyer in an effort to avoid a financial disaster, Washington Mutual Inc., the nation's largest savings and loan, continues its own battle against falling stock prices and nagging questions about its financial standing.
As its mortgage-based losses continue to pile up, Washington Mutual has entered a particularly rough patch, including a 34% slide in its stock price so far this week. The bank recently shook up its board by hiring chief executive officer Alan Fishman to replace ousted CEO Kerry Killinger.
The bank is now reported to be in "advanced discussions" about a deal to sell itself to JP Morgan Chase.
Enron Agrees To Pay Former Shareholders $7.2 Billion
As Wall Street continues to weather a storm of financial trouble, the corporation that seven years ago ushered in a tumultuous era in American finance agreed to a massive settlement with former shareholders.
Enron Corp. agreed this week to pay $7.2 billion to shareholders whose company stock certificates were no longer worth the paper on which they were printed when the company crumbled in scandal in 2001. The settlement amount, the largest ever in U.S. securities litigation, applies only to shareholders who purchased Enron stock between Sept. 9, 1997 and Dec. 2, 2001 - the day the company went bankrupt.
Posted under: Corporate Fraud