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Another One Bites the Dust
And another one gone, and another one gone. Another one bites the dust. Queen could probably make some serious royalties in the banking industry this year as two more banks have fallen despite the government's best efforts to keep them afloat.
You may have heard that two more banks fell over the weekend, causing quite a stir on Wall Street. Both Lehman Bros. and Merrill Lynch have gone under. Fortunately for Merrill Lynch, Bank of America stepped up to the plate and saved them with a $50 billion buyout, safely sliding Bank of America into the leader position in terms of deposits and investments and leaving Chase in the number two spot.
Sadly, there is no white knight for Lehman Bros. as the company filed for Chapter 11 bankruptcy. Under Chapter 11, the company will be able to restructure their internal workings while creditors are held at bay. It is likely they chose to go with Chapter 11 as opposed to Chapter 7 so that they could handle the liquidation process themselves. In Chapter 7, the court appoints a trustee who then takes over the process of liquidating the company.
Unfortunately, many investors could face losing some money under Lehman's deal; however, those with Merrill Lynch should be fine. The buyout brought Merrill Lynch shares to $29, which considering it was about to go bankrupt, isn't a bad place to be. So, those shares and the investment portfolios held with Merrill Lynch should be fine.
Does this news stress you out? Are you thinking about keeping your cash in the mattress or in a shoebox in the closet? [USA Today]