Wall Street's Winners and Losers

Sept. 16, 2008— -- As the dust settles from this weekend's turmoil on Wall Street, some winners and losers have emerged from all the action.

Clearly Lehman Brothers, its employees and shareholders lost out when the 158-year-old brokerage firm filed for bankruptcy. And New York residents could lose a lot as the state and city economies suffer from Wall Street's coming job losses.

But there are plenty of winners, too. The largest is likely to be Bank of America.

In a rushed deal, scraped together in just one weekend, Bank of America ended up purchasing Merrill Lynch in an all-stock transaction worth about $50 billion.

For years, Bank of America has aggressively expanded to become the second-largest bank in the country, by assets, after Citigroup. If the acquisition of Merrill, the world's largest brokerage, goes through, Bank of America is likely to take over as the new king of the banking world.

Merrill CEO John Thain could also benefit from the deal. He has been at the helm of the investment bank for less than a year but still could receive a $9.7 million payout, according to estimates by a pay advisory firm. That payment could happen whether he stays on the acquired company or moves on to a new job.

Richard Bove, managing director of Ladenburg Thalmann & Co., called these times scary, very scary.

"I feel a greater amount of fear now than any other time, and I've been in this business since 1965," Bove said.

What is of particular concern for him is how some large institutional and short sellers are able to move the markets so far, so fast.

"It doesn't really matter anymore what's happening in the real world. What matters is the psyche of the people driving stock prices," he said. "In my view, Lehman Brothers was not a company that deserved to be driven out of business."