By Eve Tahmincioglu, contributor
Introduction
Where Vision Gets Built. Bullish on America.
You won’t be hearing those slogans anymore. Lehman Brothers’ “vision” and “bullish” Merrill Lynch are no more.
With the financial market seeming to crumble before our eyes, you might be wondering, just who are these titans of Wall Street that are coming down so suddenly? Here is a look at Lehman Brothers, Merrill Lynch and a host of other long-time investment powerhouses that are disappearing or are at the brink.
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Lehman Brothers
Yes, there were actually Lehman brothers. Henry, Emanuel and Mayer Lehman founded the firm in 1850 in Montgomery, Ala. After the Civil War, the brothers moved the company to New York City, where they helped found the Cotton Exchange and soon after began the financial advisory end of the business. The stock market crash of 1929 sparked innovation at the firm not financial ruin, as they pioneered unique financing techniques, “arranging loans between blue-chip borrowers and private lenders,” according to the company’s historical account. “These loans offered strict safeguards and solid returns for lenders, while enabling borrowers to raise much-needed capital.”
Unfortunately, innovation flew out the window in recent years as the company found itself embroiled in the subprime mortgage mess and ended up filing for bankruptcy this week. The company had total assets of $691 billion and 26,000 employees, many of which were told to clean out their desks on Monday. But there may be a reprieve for some workers. Barclays PLC stepped to buy key Lehman Bros. operations and reportedly 10,000 workers may be asked to stay.";
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Bear Stearns Cos. Inc.
Joseph Bear, Robert Stearns, and Harold Mayer, the founders of Bear Stearns in 1923, would be turning over in their graves if they knew how the investment banking and brokerage powerhouse met its demise. Bear Stearns collapsed this year under the pressure of the subprime mortgage mess. JPMorgan Chase absorbed the company for a fire sale price as part of a government bail out in March. At first JP Morgan offered to buy the firm for of $2 a share – less than one tenth its value – but then raised the offer to $10 following protests from shareholders.
In 2007, Bear Stearns disclosed that its exposure to risky subprime mortgages hit two of its hedge funds so hard that they lost nearly all of their value. The firm, that went public in 1985, had employed 15,000 people worldwide and JPMorgan reportedly slashed about 50 percent of the Bear Stearns workforce following the merger. A long way to fall for Bear Stearns, previously named Fortune’s \"America's Most Admired Companies.\"";
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Morgan Stanley
One of only two Wall Street titans left standing, Morgan Stanley isn’t immune to the volatile financial markets. After a huge fourth quarter loss last year, the company started selling off many of its assets, and analysts speculate it may also have to find a merger partner in order to survive.
Over the years, Morgan Stanley has done its share of buying up well-known assets. In 1997, it gobbled up Dean Witter Reynolds, as well as Discover & Co. Morgan Stanley dropped the Dean Witter name in 2001, and then spun off credit card company Discover in 2007 in a move to pump up shareholder value. In it’s first full year of operation in 1936, Morgan Stanley managed $1 billion in assets. Today it manages $779 billion and employs 45,000 servicing corporations, government and individual investors.";
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JP Morgan Chase & Co.
J. Pierpont Morgan established a New York office in 1861, which handled European securities that were underwritten by his dad’s firm, J.S. Morgan & Co. During a U.S. depression in 1895, Pierpont helped bail out the government by working with president Grover Cleveland in creating a gold syndicate and supplying the precious metal to the U.S. Treasury. J.P. Morgan & Co. became JP Morgan Chase after it merged with Chase Manhattan Corp. in 2000, essentially combining four of the biggest banks in New York City, Morgan, Chase, Chemical and Manufacturers Hanover.
Given Pierpont Morgan bailed out the U.S. government once upon a time, it was only fitting that more than a century later the government would orchestrate a sweetheart deal for JP Morgan Chase to buy Bear Stearns earlier this year for $10 a share, less than one tenth of the firm’s value. Late September, the investment bank bought $1.9 billion of Washington Mutual's assets, after the thrift became the largest commercial bank to fail. JP Morgan Chase has assets of $1.6 trillion, and has investment banking and financial services operations as well as commercial banking with 180,000 total employees.";
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Merrill Lynch & Co.
The world’s largest brokerage firm with $1.6 trillion in assets was saved from the clutches of disaster when Bank of America announced this week it would buy Merrill Lynch. It’s a less than poetic ending for the 94-year-old company whose founder Charles E. Merrill’s credo was: \"I have no fear of failure, provided I use my heart and head, hands and feet — and work like hell.\"
Merrill and Edmund C. Lynch met when they were boardinghouse roommates in 1907, and the two went on to create an investment house behemoth that survived many severe economic downturns. That is until 2007 when the subprime crisis swept through the global financial market, and Merrill Lynch posted losses of $8 billion. Former CEO Stanley O’Neal announced his retirement as a result and left with a hefty golden parachute of more than $160 million, prompting a call from Congress for him to testify on his big payout. It’s unclear what will happen to the firm’s 60,000 employees.";
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The Goldman Sachs Group Inc.
While Wall Street’s investment community appears to be crumbling, Goldman Sachs is considered by many analysts to be the best of the struggling bunch and it’s also the largest of the largest investment-banking firms left standing.
The company’s saving grace so far has been: It wasn’t as exposed to the subprime debacle as its competitors. But market forces are still hampering Goldman Sachs’ bottom line, as witnessed by its most recent quarterly results that showed the worst drop in profits since the firm went public in 1999. German Jewish immigrant named Marcus Goldman founded Goldman Sachs in 1869. Twenty years later, Goldman’s son-in-law Samuel Sachs joined the firm and Goldman Sachs was born. The firm has $1 trillion in assets and 30,500 employees.";
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