Mortgage Crisis effect on Merrill Lynch, Lehman Brothers

Topic: Mortgage Crisis

The repercussions of Mortgage crisis is devastating. The ill-effects is slowly moving into the Financial world. The day would not be too far when the negative output spreads all over the world affecting every aspects of the functioning of the financial world. Two of the major Financial Institutions facing the heat of Mortgage crisis is Merrill Lynch and Lehman Brothers.

The main reason for this fall is considered to be bad Mortgage Finance and Real estate Investments.

Merrill Lynch which was worth $100 billion last year is now taken over by Bank of America for $50 billion. This act of Merrill Lynch is considered to avert the huge financial losses that they have been facing. Lehman Brothers unable to find a company which could take over them has chosen the path of  Liquidation to avoid the huge Financial loss. According to leading Economists and other financial Institutions these two events would greatly affect the American Finance sector in a negative manner. With Lehman Brothers chosing the path of Liquidation, the Indian Stock market faced a severe downward movement losing nearly
Rs 2000 crores.

Another event which is expected to have ever lasting effect in American Finance sector is American Institutional Group a major Insurance Company seeking $40 billion from Federal reserve to sustain the losses from the credit crisis.