For Immediate Release
Markets Slammed by Lehman Collapse
Dow drops more than 500 points or 4.5 % as investors panic after Lehman Brothers files for chapter 11
WASHINGTON - US stocks were slammed on Monday after a stunning upheaval on the Wall Street landscape.
The Dow Jones fell more than 504 points or 4.42 percent, the largest one-day drop since September 2001. This as investors reacted badly to a shake-up of the financial industry that took out two storied names: Lehman Brothers Holdings Inc. and Merrill Lynch & Co. Lehman Brothers, which had 60 billion US dollars in soured real-estate holdings, filed a Chapter 11 bankruptcy petition in court after attempts to rescue the 158-year-old firm failed.
Employees started to clean out their offices in New York on Sunday night. About 26000 Lehman Brothers employees lost their jobs worldwide. Another Wall St. icon Merrill Lynch was snapped up by Bank of America in a 50 billion dollar all-stock transaction in what was essentially a forced sale. Merrill Lynch was said to have 80-plus billion dollars of risky asset exposures.
The disappearance of the two firms could mean the loss of up to 50,000 jobs in the financial sector. That industry has already lost 100,000 jobs since the start of the credit crisis a little more than a year ago.
Doug Henwood of the Left Business Review tells The Real News, "This is an experiment in real time. We just don't know where this is going to go. It could be that this is, you know, the big storm that marks the end of all this. It's very, very hard to read."