Wall Street is readying for a stormy Monday as Lehman Brothers, the fourth-largest investment bank in the U.S., prepares to file for bankruptcy.
Sunday night, the two strongest potential buyers appeared to have pulled out of talks to rescue Lehman, which means the bank will likely become the latest victim of the U.S. credit crisis.
If no new financing comes before Wall Street opens, it will have to seek “Chapter 11” bankruptcy protection. This could result in a severe shock to the global financial system, as banks unwind their complex deals with Lehman.
Former Federal Reserve boss Alan Greenspan said Sunday that the government faced “very difficult decisions” over Lehman if it could not secure a rescue deal that did not involve public funds.
“They [will then] have to make a very difficult decision as to whether or not they allow it to liquidate or they support it,” he said.
Greenspan added that it would be “unsustainable” for the government to bail out every bank that got itself into difficulty.
How will all this impact the Mid-South? Stayed tuned. For a more comprehensive analysis of the Lehman situation, go here.
–BV
