of terrifying events that changed financial history forever.
Here’s my diary of the events as they unfolded,
beginning on one of the most dramatic days of
that era …
Monday, September 15, 2008.
- After weekend emergency negotiations collapse and the Fed declines to participate in a bailout, Lehman Brothers, a Wall Street firm heavily involved in high-risk derivatives transactions, files for bankruptcy.
- JPMorgan Chase, the nation’s single biggest player in the market for derivatives, puts up $138 billion to settle Lehman’s outstanding transactions. Nearly all of Lehman’s other assets go into immediate liquidation.
- Merrill Lynch, the nation’s largest brokerage firm, is also suddenly bankrupt. It’s abruptly sold to Bank of America in a shotgun transaction engineered by the Fed.
- American International Group (AIG), the nation’s largest player in the derivatives markets among insurers, is also broke. But unlike Lehman, it gets an instant $85 billion bailout from the Fed in exchange for an 80% interest in its shares.
September 19. To stem the panic, the U.S. Treasury announces the equivalent of federal deposit insurance for money market funds, transferring still more responsibility from the private to the public sector.
September 21. In order to qualify for government support and bailout funds, America’s two largest investment banks — Goldman Sachs and Morgan Stanley — d
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