The absence of government oversight for the past 7 years plus the dangers of reckless deregulation of the financial companies struck hard at the American financial system this date, threatening it in the most grave manner since the Great Depression.
In a desperate move to stave-off international credit rating reductions the Federal Reserve initiated unparalleled measures to inject massive liquidity into the markets this date.
Banks will be able to turn in high risk Credit Default Swaps and speculative stocks for cash.
What will the Federal Reserve do with such 'assets'? Presently, no one knows with certainty what will happen, but it is likely that the American taxpayer will be stuck with the bill.
Lehman Brothers (LEH), a 158 year old venerable Wall Street firm filed bankruptcy this morning.
This action reflects the total absence of risk management and prudent judgment by its executives.
Yet, these executives, if ousted, will receive millions in compensation due to the 'Golden Parachutes' common in corporate America.
In essence they will have received these millions for having destroyed a long-term, reputable firm with world-wide relationships.
Approximately six months ago, Lehman Brothers had discussions with multiple other financial entities and numerous offers were extended.
However, the greed and hubris of these executives prevailed and all offers were rejected because the value would not satisfy their greed and they would have had to surrender executive controls.
Instead, bankruptcy was forced on the firm this morning.
This after a weekend filled with desperate attempts to find short-term financing and/or a government bail-out that would have allowed the company to continue its operations and be compliant with government regulations for securities firms.
Sadly, it will be the millions of shareholders and the 20,000 odd employees who will suffer.
Part I of II parts