Housing Crunch Blamed for Latest Wall Street Woes

by Tracie Potts

NBC News

Wall Street's in turmoil today dealing with the biggest shakeup since the great depression.

One big investment bank is bankrupt, another had to be sold, financial markets are reeling and the nation's largest insurance company is on the brink of disaster.

This weekend two big Wall Street firms were about to collapse.

Today, one of them is bankrupt, the other survived barely. And investors are nervous.
Markets in New York and around the world today all reeling from news that Wall Street stalwart Lehman Brothers has gone bankrupt without a government bailout like bear Stearns got six months ago.

"I never once considered that it was appropriate to put taxpayer money on the line - with ah - in resolving Lehman brothers," said Treasury Secretary Henry Paulson.

"The federal government can not save every failing company - nor should it try," said New York City Mayor Michael Bloomberg.

Another firm, Merrill Lynch, survived selling out to Bank of America.

The two told investors once the chips fall they plan to be on top.

"It's not gonna get better quickly but it will eventually and we'll be better positioned when it does," said Merrill Lynch CEO John Thain.

Wall street's latest collapse from risky sub prime loans has left some investors angry.

"Maybe they won't be so ah, greedy and um, ah, silly with other people's money in the future," said Bill Lindeman of Fredrick, Maryland.

President Bush admitted today it's painful

"We're working to reduce disruptions and minimize the impact of these financial market developments on the broader economy," Mr. Bush said.

But it's not just banks in trouble.

America's largest insurer, A.I.G, needs a loan of up to 40 billion dollars this week.

New York's governor is giving A.I.G. the ok to secure it with billions in assets from its subsidiaries.
"Simply giving AIG, in effect, the ability to provide for a bridge loan to itself," said New York Governor David Paterson.

Money that could prevent AIG from becoming the next casualty on Wall Street.