Merrill bought, Lehman bankrupt

[RBHoya]

So, getting away from the million political threads for a minute, some huge things are going down on Wall Street. Right now it's looking like Merrill is going to be bought by Bank of America, and it looks like Lehman Brothers is going to go bankrupt.


biz.yahoo.com/ap/080914/merrill_bank_of_america.html

biz.yahoo.com/rb/080914/lehman.html

Lehman going completely bankrupt is pretty crazy, so much for "too big to fail"... After everything that happened with Bear earlier this year, it seems like things were just too untenable to keep the bailouts rolling. Should be really interesting to see the ripple effects on this, since there's really not a lot of precedent in recent history. Supposedly AIG is in terrible shape right now as well and could falter next. This is really an historic moment in the financial history of America. Thoughts on this and what might happen next?

[PushyGuyFanClub]

What happens next is that tomorrow is going to be rough. But as a buddy told me on Friday, it's either the end of the world or the best time in history to buy stocks. Either way, we might as well go all in.

[sleepyjackson21]

Our banking system is a mess. Bear gone, Lehman gone, AIG on the edge, Merrill being thrown a lifeline. Liquidity is gone! Gold will rocket and so much for the dollar. Stagflation here we come! Historic times and not in a good way.

[Bando]

With the economy collapsing, I'd just like to offer you all a position as henchmen officers in my soon to be formed post-apocalyptic survivalist tribe. As officers in my growing army of henchpersons, you'll have your pick of the least suicidal missions, as well as all the hoarding you can handle. And did I mention the guns? You'll get lots of guns!

Drawbacks in joining Lincoln Park Prosperity Compact include having to refer to me as "The Leader", eating only canned food for the rest of your life, and the prospect of unending war against those bastards in the Stanton Park Alliance. But that's nothing when compared to the joys of looting the hell out of the Safeway and manning the barricade.

So join me, and together we can live for another 5-10 years, which is a lot longer than if you were unaffiliated. Apply today!

[LizziebethHoya]

The financial industry is in a state of chaos right now. The crazy thing is that just a year and a half ago we were enjoying some of the best financial times in history. How things change.

It's also necessary to note that Georgetown is one of the biggest feeders into Merrill and Lehman (both IBanking and Trading) so a lot of our fellow alumni are unfortunately going to be affected by this.

[strummer8526]

Sept 14, 2008 23:03:42 GMT -5 LizziebethHoya said:

It's also necessary to note that Georgetown is one of the biggest feeders into Merrill and Lehman (both IBanking and Trading) so a lot of our fellow alumni are unfortunately going to be affected by this.

Yeah that was my first thought. I mean, during my senior year some part of me wanted to see the "I'm going to make a ton of money, so look at me with my resumes and my suit in October" B-school kids get their come-uppins. But not like this. I'm sure Georgetown grads will find acceptable work SOMEWHERE, but this will certainly trickle down. I wonder if the value of diplomas from some mid to low end schools is going to plummet.

[vcjack]

"I wonder if the value of diplomas from some mid to low end schools is going to plummet."

That will probably happen. My parents managed to survive some of the great bank collapses of the 80's but many of their fellow Wisconsin grads did not.


But in any case the MSB and the GU Career Center should start work IMMEDIATELY retooling to take into account the new Wall Street realities*


*Maybe they have already, as a typical uncomited College guy I don't know these things

[HoyaNyr320]

But don't worry people. McCain says that the fundamentals of our economy are still strong.

briefingroom.thehill.com/2008/08/20/mccain-the-fundamentals-of-the-economy-are-strong/

[StPetersburgHoya (Inactive)]

Sept 14, 2008 21:48:17 GMT -5 RBHoya said:

So, getting away from the million political threads for a minute, some huge things are going down on Wall Street. Right now it's looking like Merrill is going to be bought by Bank of America, and it looks like Lehman Brothers is going to go bankrupt.


biz.yahoo.com/ap/080914/merrill_bank_of_america.html

biz.yahoo.com/rb/080914/lehman.html

Lehman going completely bankrupt is pretty crazy, so much for "too big to fail"... After everything that happened with Bear earlier this year, it seems like things were just too untenable to keep the bailouts rolling. Should be really interesting to see the ripple effects on this, since there's really not a lot of precedent in recent history. Supposedly AIG is in terrible shape right now as well and could falter next. This is really an historic moment in the financial history of America. Thoughts on this and what might happen next?

It makes you wonder if other industries that are over-exposed to the banking and finance sectors will also be hurt by this. For example, when Bear Sterns failed there were lay offs at law firms that dealt heavily with Bear Sterns. Things could get a lot worse before they get better.

[FewFAC]

If you've got the stomach for it, now is an interesting time for knife-catching. No way AIG gets $40B from the Fed if LEH can't get Bear-like treatment for what is probably a more important cog than was Bear. The reality is the system will probably be better off (and would have been had Bear gone out the same way). It's sickening to know that so much more bloodletting remains because the org structures really don't provide the opportunity to weather the crisis, and the City will supplant Wall Street for some time. Really a massive strategic gaffe by federal administration and regulators. At least Tokyo, Seoul, Singapore (Shanghai?) closed or it could be very ugly. How is Fuld still driving anything?

[williambraskyiii]

Fuld might want to start walking around with body armor on.

[Filo]

As far as the impact on lawyers and others in related areas, yes, they are getting hit and it will be getting worse. I have heard of big cuts at some firms (securitization departments, etc.).

Too much chaos for me to even try catching some falling knives here...

[Deleted]

Sept 15, 2008 8:32:51 GMT -5 Filo said:

As far as the impact on lawyers and others in related areas, yes, they are getting hit and it will be getting worse. I have heard of big cuts at some firms (securitization departments, etc.).

Too much chaos for me to even try catching some falling knives here...

I have no sympathy for the legal industry in this case. If they didn't learn their lesson from the "internet bubble bursting" in the late 90's/early 00's, then that's their problem.

I can remember my first year in law/business school ('02) when several large Boston firms went under because they were over-extended in their tech/biotech/corporate/etc. sectors, were dependent on real estate and other traditional departments to keep the ship afloat, and when those departments realized there was more money for them in leaving, sunk the rest of the firm.

I feel bad for the secretaries and support staff that will lose their jobs, and that's about it.

[strummer8526]

Any DC firms or firms w/ DC offices specifically come to mind? Or any telltale signs of a firm at risk (for someone making a law firm choice within the next 3 weeks)?

[theexorcist]

Sept 15, 2008 9:16:42 GMT -5 strummer8526 said:

Any DC firms or firms w/ DC offices specifically come to mind? Or any telltale signs of a firm at risk (for someone making a law firm choice within the next 3 weeks)?

The concern everywhere is overspecialization. If all your firm does is X, and the market for X dries up, bad things will happen.

DC's focus is on the government in all of its glory. If a firm hedges its bets on Republicans or Democrats, and things don't turn out right in November. If specialization is on defense contracting, and there's less of that in the future, contraction happens.

When you're looking at your last few choices, read. Read everything. In the Enron debacle, quarterly reports actually made it quite clear that problems were afoot - but it was printed in the sixty-seventh footnote. Get a good idea of what the firm does, what its key bets are, how heavily those bets are mortgaged, and what happens if those bets go south.

[Deleted]

Sept 15, 2008 9:16:42 GMT -5 strummer8526 said:

Any DC firms or firms w/ DC offices specifically come to mind? Or any telltale signs of a firm at risk (for someone making a law firm choice within the next 3 weeks)?

Don't take a job at a firm that is HEAVY into volatile practices.

A firm like Testa Hurwitz (350-400 atty's at its peak) folded because steady money-makers like PE and fund formation jumped ship when the firm's venture/start-up practice crumbled. Several soon-to-be or recent grads from ALL of the Boston-area law schools (Harvard, BU, BC, Suffolk) were dumped, and it was a big deal.

Same thing with Hill & Barlow when their RE partners left. Additionally, my friend had a job lined up with a prominent SF-area firm (can't remember the name) and was told his offer was pulled because the firm was folding THREE WEEKS before he was set to graduate.

Best firms to consider if you value stability have strong bankruptcy, real estate, labor/employment practices, in my opinion.

Better advice? Only stay in the law game as long as it takes you to get a better job in another industry. Billing hours is no way to live your life, especially if you're doing it at a big firm. Life's too short to go to bed, wake up, and spend your vacations worrying if you're going to get that 200 or so hours a month in.

[hoya4ever]

Unrelated to the immediately above, but won't BofA have to face some sort of legal issues with the merger?

I mean, aren't they only allowed 10% of the market before they are processed for monopoly laws? (I might have that number wrong but I remember learning something about this in intro finance)

[strummer8526]

I thought it was 90%.

[The Stig]

I fear that GTown kids are getting hit hard by this. It seems like everybody I talk to is either hitting big trouble in their job search or knows somebody who had a job at Bear Stearns or Lehman. I just had lunch with somebody whose friend just got a great job at Lehman, and now is back to square one.

Suddenly I'm sort of glad that I'm one of those types that needs a calculator to add 8+7.

[sleepyjackson21]

The kid who just got the job at Lehman is the lucky one. He had nothing vested in the company. He can go back to looking for a job just like thousands of other people. Welcome to the real world kid!