It’s A Scary Day Today
Dow plunged more than 500 points–its biggest point drop since 2001 terrorist attacks.
Lehman Brothers filed for bankruptcy, listing $613bn of debt–making it the biggest ever in US history. How I wish I had read this Fool-ish advice and bought some serious put options on Lehman!
Bank of America bought Merrill Lynch for $50bn in stock, creating the world largest financial services company. Fortunately I never paid attention to Fortune magazine, who listed Merrill Lynch as one of the best stocks to buy in 2008… when it was trading at around 50. Nice pick, Fortune.
Kenneth Lewis, CEO of Bank of America, stated that he didn’t know of a major bank that doesn’t have some significant exposure to AIG. An AIG collapse would “be a much bigger problem than most that we’ve looked at,” he said. AIG shares plunged from closing price of $12.14 on Friday to less than $5.
Senior managers in my bank keep telling everybody that we’re doing fine. BUT… Lehman’s CEO Richard Fuld was doing exactly that until the very last moment. At one point, Lehman’s management even announced a plan to provide a mid year bonus of stock that can be purchased at around $20 a share (and looky looky where it is now?).
(Dick Fuld is not just any ordinary CEO, mind you. He brought Lehman back from the catastrophy that was Long Term Capital Management. Until recently his men wouldn’t hesitate to “bleed Lehman green” for him… which I guess from now on will take a more literal meaning since they must be taking a lot of headache medicine.)
Scary stuff. Job security is a lot scarier topic when you have a family to feed. I’d better work on those passive income streams and marketable skills even harder. I have friends who used to work for Lehman Brothers, and it’s not pretty. Not pretty at all.
(Image courtesy of mugley @ flickr)