In the News: Financial Crisis Hits Three Wall Street Giants

In the wake of the government’s recent takeover of mortgage giants Fannie Mae and Freddie Mac, three of the nation’s major financial institutions were rocked to their foundations this week: Lehman Brothers, a century-old investment bank, declared bankruptcy, brokerage firm Merrill Lynch was bought by Bank of America and insurance giant AIG was bailed out by an $85 billion loan from the federal government, which in effect bought a nearly 80 percent stake in the company. All three were rocked by overexposure to subprime mortgages and related investments. Lehman Brothers’ future remains somewhat uncertain. The English financial firm Barclays bought parts of Lehman, but some divisions may remain in operation.

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