Who survives? Lehman, a 158-year-old firm that started as an Alabama cotton brokerage, and Merrill, known by its trademark bull logo, have been pillars of Wall Street for much of the last century. With the demise this spring of Bear Stearns, three of the Street's five major independent brokers could end up disappearing, leaving Goldman Sachs and Morgan Stanley.
Why should we care? The convulsions could lead to tighter credit, higher borrowing costs and moribund capital markets, as securities firms and commercial banks try to further limit risk and preserve capital. Those moves could cause the U.S. economy to slow further.
How did we get here? The damage on Wall Street is the latest consequence of a storm that began last year with the sharp decline in American housing prices and losses on loans and other assets tied to home values. Massive capital infusions have failed to stem writeoffs and losses.
What happens today? Regulators and others were preparing for a chaotic day. The New York Stock Exchange probably spent the weekend preparing contingency plans to reassign the approximately 200 blue-chip stocks that Lehman's specialist unit trades. If Lehman is forced into liquidation, the exchange will likely transfer the stocks to one or more of the remaining specialist firms.
Who's being blamed? Any villains? Fingers were being pointed Sunday at "short sellers," speculators who make profits essentially by betting that a stock will fall, for attacking the stability of Lehman and adding to its troubles by talking publicly about its financial frailties. There was talk of regulators limiting this type of trading.
Information from the New York Times and the Wall Street Journal was used in this report.