Another Big Investment Bank Bites the Dust

Posted by Steven Rosenfeld, AlterNet at 6:14 PM on September 11, 2008.

The sub-prime mortgage crisis apparently has another big victim on Wall Street. The Washington Post is reporting that the federal reserve will help sell Lehman Brothers, one of the country’s largest investment banks. Just days ago, the Treasury Department announced a government-backed takeover of Fannie Mae and Freddie Mac, which holds half of the U.S. home mortgages. The impending demise of Lehman Brothers has been rumored for month, but the ripples will be felt throughout the economy -- not just on Wall Street -- as access to loans and credit generally tightens for all borrowers. The larger question is at what point do today’s banking failures rival the Great Depression of the 1920s and early 1930s? The answer to that question arguably is more important than whether GOP vice-presidential candidate, Sarah Palin, is wearing lipstick.

Steven Rosenfeld is a senior fellow at Alternet.org and co-author of What Happened in Ohio: A Documentary Record of Theft and Fraud in the 2004 Election, with Bob Fitrakis and Harvey Wasserman (The New Press, 2006).