Banks Blog » Failure http://blog.bankslawoffice.com Just another WordPress weblog Wed, 26 May 2010 03:36:00 +0000 en hourly 1 http://wordpress.org/?v=3.0 The Irony of the Fall of the Houses of Merrill, Lehman and Bear http://www.bankslawoffice.com/blog/2008/09/the-irony-of-the-fall-of-the-houses-of-merrill-lehman-and-bear/ http://www.bankslawoffice.com/blog/2008/09/the-irony-of-the-fall-of-the-houses-of-merrill-lehman-and-bear/#comments Fri, 19 Sep 2008 05:29:05 +0000 bob http://blog.bankslawoffice.com/?p=9 Who would have believed even a year ago that we would have witnessed the demise of so many Wall Street behemoths?  First Bear, then Lehman and now Merrill.  And the fallout is not over yet.  Even the mighty, invincible Goldman Sachs is showing cracks in its foundation.  The failures of these firms raise a myriad of questions.  How could these firms let themselves get here?  Why does the government bail out Bear, the bad boy bully of Wall Street, and let Lehman sink into bankruptcy?  What does this foretell of the future of the brokerage industry?  Are we heading toward a world in which a few Uber-Banks own all the major broker-dealers and your bank teller tries to get you to sit down with your Merrill broker (who as a table right in the bank) every time you deposit your paycheck?  Is the loss of diversifiation of stock broker firms as dangerous as a lack of diversification in a portfolio?

All legitimate questions to be sure.  But the more fundamental issue, which we have heard no one discussing, is this:  Isn’t it ironic that these stock brokerage and investment firms, who afer all  have charged us billions of dollars to give their expert advice on managing our investments and planning for our retirements, cannot even keep themselves solvent?  How can these firms claim to be the masters of the universe, how can they claim to have investment advisory expertise, if they can’t even keep themselves out of financial ruin?  It is something worth considering the next time that a brokerage firm tells you that they have the resources of their entire firm behind them.

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