WASHINGTON -- Two of the country's leading financial institutions had difficult weekends.
In another chapter in the shakeup of the American financial system, banking giant Bank of America on Sunday reached an agreement to buy the venerable brokerage house Merrill Lynch for $50 billion.
The merger comes in the wake of a year of mounting losses for Merrill Lynch, which resulted in last October's firing of its CEO. The new CEO, former New York Stock Exchange CEO John Thain, has tried to reverse some of the losses but was doing so in one of the worst economic climates of the past few decades.
Bank of America's move is the latest of many high profile acquisitions, including Countrywide Financial Corp. and MBNA.
The $29-per share price for Merrill Lynch, is about two-thirds of the firm's value last year and half of its highest level in early 2007.
Lehman Brothers, after failing to find a buyer, announced it will seek Chapter 11 bankruptcy decision in what would be the largest failure of a Wall Street institution since Drexel Burnham Lambert in the 1990s.
Lehman, which last week projected its losses for the current quarter could be $3.9 billion, had unsuccessfully sought government backing to make itself more attractive to potential buyers.
Once the Treasury Department declined to use taxpayer money to make up some of the firm's losses in real estate investments, potential buyers Bank of America and British bank Barclays walked away from negotiations with Lehman.
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