Articles
Newsletters
Home 
Business Real Estate Mortgage Securities Doom Merrill and Lehmans
Business Real Estate Mortgage Securities Doom Merrill and Lehmans
| Mortgage Securities Doom Merrill and Lehmans |
 |
 |
 |
| Written by Dan Gibson |
| Sunday, 21 September 2008 07:50 |
|
We have all heard about the problems in the banking industry, but has it really bothered anyone? Nope. At least until September 15, 2008 when two of the pillars of the financial world faded into oblivion and raised questions about the mortgage market as a whole. Lehman Brothers was founded in 1850. It is a massive investment bank with fingers in financial markets across the world. On the morning of September 15, 2008, it filed for bankruptcy protection with 613 billion dollars in debt. Merrill Lynch was funded in 1914 and is a stalwart of the financial world. This company provided services in just about every venue and was considered a pillar of the financial world. Facing insolvency, Merrill was purchased by Bank of America on September 15th. These two failures should be a blaring warning sign. Two of the fundamental companies of finance have just crashed and burned. This means anything and anyone could be next. It also means the end of bad news is nowhere in sight. I am utterly amazed by the current state of things. We are seeing events in the financial world that equal those in the Great Depression. A potential collapse of the banking industry is no longer unthinkable, yet no one has panicked. How can this be? Ben Bernanke deserves a huge amount of credit. The Fed has been taking drastic action, but with a light touch. Many banks have been taken over, but it always happens over a weekend when media attention is low. The end result is we have not lost faith in our banks. There has been no rush to get money out. This gives us a chance to fix the banks, but cannot help with a simple fact. The housing market is in for a long, brutal ride. The circumstances surrounding the real estate market are so bad that many larger investors will not put money into mortgages for fear of being sued by their investors. This is because mortgage securities are viewed as being so risky. That may sound somewhat interesting, but think it through. The backbone of the American Dream of homeownership is now viewed as a bad investment. Homeownership is the key to our middle class, so now what? So, are we headed for financial catastrophe? Could the banking industry collapse and lead us to another Great Depression? It sounds ludicrous, but the fates of Fannie Mae, Freddie Mac, Lehman Brothers and Merrill Lynch make it a valid question. We are not going down without a fight if it does happen. Ben Bernanke and the Federal Reserve are taking drastic action. The news that a group of banks have create a massive pool for troubled banks to draw against is also good news. Everything really comes down to Ben Bernanke and the Federal Reserve. If there is anyway to negotiate this mess, I believe he can get us through it. We may see a lot more bank failures, but it may be a health pruning. Kindly provided by MoneyHunter.org You are welcome to use this article on your own website, if you include the link just before this text. |
Members : 2607
Content : 2689
Web Links : 1
Content View Hits : 254586
Content : 2689
Web Links : 1
Content View Hits : 254586