Former US Fed governor Alan Greenspan describes it as a 'once in a century' event, and the 'worst' he's seen in his career. Lehman Brothers, which has survived over 150 years, finally went into Chapter 11 late Sunday night, putting tens of thousands of jobs at risk all over the world. Merrill Lynch, the other Wall Street major, narrowly avoided Lehman's fate by agreeing to be bought by BofA for USD 50 billion – again raising the spectre of an uncertain future for its thousands of global employees. The US government, which bailed out Fannie Mae, Freddie Mac, and Bear Sterns, put its foot down with Lehman, and last minute potential buyers like Barclays walked out late Sunday night.
At Lehman's US offices, television channels captured scenes of employees leaving the building with cardboard boxes, while at its European headquarters in Canary Wharf, where the bank is estimated to employ around 4000 people, the mood was sombre as employees were told to turn up for work, but not to do any business.
It is not yet formally announced what the fate of the employees are to be, but it is unlikely that with the bank in administration, many jobs will survive. The Bank of England has issued a statement it will monitor the currency and commodity markets and take 'appropriate steps to stabilise those markets if necessary".
Reports say the BoE has offered GBP 5 million extra reserves for sterling currency markets, while the European Central Bank has offered unlimited overnight liquidity. In an effort to limit the impact of Lehman's crash, 10 of the world's biggest banks have come together to create a liquidity pool of USD 70 billion to tide over the crisis.
It is reported that PwC is likely to be given the mandate for dismantling the huge operations of Lehman Brothers in UK. Lehman has its Asian headquarters in Tokyo, Japan. As damage reports continue to come in, financial experts expect more major collapses.
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