Lehman Brothers - Shut Down

Lehman Brothers, one of the major financial brokers in America, has been forced to file for the biggest bankruptcy in history, according to the Financial Review this morning. Lehman Brothers, the 158-year-old finance broker, had made over US$59 Billion in 2007 with it’s total assets equating over US$691 Billion in the same year. Lehman Brothers also employed over 26,200 employees in 2008 alone, 130 of which were employed here in Australia were forced to file for Chapter 11 with the bankruptcy court for the Southern District of New York – “In order to protect its assets and maximise value”.

At the same time, another large Wall Street bank, Merrill Lynch, has been sold to Bank of America as fear has been spread of a global meltdown in the financial market. As the United States is one of the biggest economies in the world with Wall St, this has impacted hard on our Australian market, with the stock market tumbling sharply to 4,817 – a decrease of 1.8 per cent.

One of the biggest drops was seen in National Australia Bank which dropped 4.1 per cent but our dollar climbed steadily and stopped trading at 82.14 US cents.

Employee's Vacating Lehman Brothers

The Australian Stock Exchange (ASX) commented, saying Lehman Brothers had been suspended for up to a month, because its third-party clearers Citi Securities and Berndale Securities had terminated their arrangements with the firm.

Worldwide Financial Institutions who have had dealings with Lehman Brothers stand to lose billions of dollars due to its recent declaration of bankruptcy. To minimise losses, there was an emergency trading session on Sunday in New York to allow them to unwind some of their positions with Lehman, lets hope things work out. Unfortunately, this will only delay the inevitable when stock markets fall fast when opened.

Information sourced from following:

Financial Times (Paper)
ABC News (Information & Image)