Mayor Bloomberg has cancelled his trip to California Monday due to the financial turmoil of two major financial institutions in NYC, WCBSTV reports.
The mayor spent all weekend on the phone with federal officials and financial executives trying to gather intelligence from his friends and former colleagues on Wall Street.
While he does not have any specific or special knowledge on the situation, Bloomberg feels the right thing to do is at this point is to be here in NYC.
The Wall Street Journal reports: The American financial system was shaken to its core on Sunday. Lehman Brothers Holdings Inc. faced the prospect of liquidation, and Merrill Lynch & Co. was close to a deal to sell itself to Bank of America Corp.
The U.S. government, which bailed out Fannie Mae and Freddie Mac a week ago and orchestrated the sale of Bear Stearns Cos. to J.P. Morgan Chase & Co. in March, played much tougher with Lehman. It refused to provide a financial backstop to potential buyers.
Without such support, Barclays PLC and Bank of America, the two most interested buyers, walked away. On Sunday night, Bank of America was close to striking a deal to buy Merrill Lynch for about $44 billion, or $29 a share. Lehman was working on a possible bankruptcy filing that would allow most of its subsidiaries to continue operating as the firm is wound down.
A sense of foreboding gripped Wall Street as top executives feared collateral damage from a Lehman liquidation. Attention turned to Merrill Lynch, which boasts the largest force of retail brokers, and to American International Group Inc., the insurance giant. Both firms have seen their stocks get hammered, and their managements spent the weekend trying to come up with plans to reassure the markets.
AIG executives spent the weekend trying to raise cash, either from asset sales or a capital infusion from private-equity firms, or both. AIG executives were meeting with regulators to see if they could transfer capital from some of its subsidiaries to the holding company.
As worries spread across Wall Street that Lehman wouldn't survive, brokerage firms, hedge funds and other traders moved to disentangle themselves from trades with Lehman. When hopes of a potential sale dimmed, a quiet Sunday on Wall Street turned into a mad rush. Executives and traders hurried to their offices or worked their phones to unwind outstanding contracts with Lehman and to gauge their overall exposure.
(CBS2 HD / Wall Street Journal)
http://www.theyeshivaworld.com/article.php?p=23477
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