Wall Street's Winners and Losers

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."

The Job Loses

It is still too early to say how many people are going to lose their jobs. But experts estimate that following Lehman's bankruptcy and Merrill Lynch's sale, financial sector job losses will total tens of thousands, most of them in New York City.

New York City Mayor Michael Bloomberg said the jobs losses would have an impact on the city's tax revenues. By 2010, he said, the city is projected to have a $2 billion budget deficit.

But Bloomberg also said that the city would remain resilient.

The "vital signs of the city's economy remain strong -- a lot stronger than in much of the rest of the nation," he said. "New Yorkers have gotten through the ups and downs of Wall Street before, and we will get through this one, too. We know how to make tough decisions, we know how to come together, and we know how to emerge a stronger city as a result."

There is also another loss for New York in the Merrill sale: the disappearance of a global business headquarters from New York. Bank of American is based in North Carolina and with all its past acquisitions oversight functions have shifted from local markets to North Carolina. While Merrill is likely to always have a strong presence on Wall Street, it will probably become more of a North Carolina operation, benefiting that state but hurting New York.

Who is to Blame?

Lehman Brothers CEO Richard S. Fuld, Jr. has been taking most of the brunt. Just back in April he declared that the worst of the credit crisis had passed. Now, five months later, his company is in bankruptcy court.

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