In what some observers are calling a reshaping of Wall Street, two of the world’s largest investment banks, Merrill Lynch and Lehman Brothers, are set to disappear. Lehman has announced it will file for Chapter 11 bankruptcy protection, and Merrill Lynch was bought by Bank of America. For all the complicated financial instruments and relationships involved in the current financial turmoil, the underlying cause is still relatively simple: the bursting of the housing bubble. One market strategist told The New York Times: “We are in the grip of a vicious …
Following up on his apologia for Freddie Mac and Fannie Mae today, Paul Krugman blogs: What you need to know here is that the right — the WSJ editorial page, Heritage, etc. — hates, hates, hates Fannie and Freddie. Why? Because they don’t want quasi-public entities competing with Angelo Mozilo. And it’s true: We do hate Fannie and Freddie. But not for the reason the Krugman conjures up. We’re not afraid of Fannie competing with the likes of Countrywide Financial CEO Angelo Mozilo. If only that were the case! The …
