Bankruptcy

Lehman Brothers, the 158-year-old, fourth largest U.S. investment bank that withstood the railroad bankruptcies of the 1800s and the Great Depression, could not survive the subprime mortgage crisis it had a hand in creating. For anyone who still wants to solely blame individual homebuyers for making bad decisions in taking on low-interest or no-interest mortgages they could never hope to handle in the long run, stop. The implosion of these storied Wall Street firms and worries that we have not hit bottom yet make it disastrously clear there is lots of blame to go around. Lehman could not dig its way out of $60 billion in bad real-estate holdings -- mortgages that never should have been written in the first place.

So now, Lehman's 26,000 employees could all be laid off, while many of Merrill Lynch's 60,000 employees will be looking for jobs, too. More jobs lost leads to higher unemployment, which leads to less spending and saving by all of us. As residents of the Gulf Coast will be battling the effects of a tough hurricane season for years to come, we will all be feeling the effects of a mortgage crisis that has yet to end. How has the unraveling mortgage crisis touched your life? Read More »