Bankrupt!

(Newser) - The nation's top finance officials briefed members of Congress tonight on an unprecedented plan in the works to keep troubled institutions afloat, the Wall Street Journal reports. Treasury chief Henry Paulson and Fed chief Ben Bernanke said they would work through the weekend to get something to lawmakers for a vote next week. The centerpiece reportedly remains a mechanism to buy bad loans from banks. More »

(Newser) - On paper, the losses from the credit crisis are probably "the greatest destruction of financial wealth that the world has ever seen," writes Steven Pearlstein. But the trillions that have disappeared aren't the biggest casualty of the last year. Rather, says the Washington Post columnist, we are undergoing a fundamental recalibration about credit—the era of cheap money is over. More »

(Newser) - Britain's biggest mortgage lender, HBOS, is in advanced discussions with Lloyds about a possible buyout, reports the Financial Times . Stock in the troubled lender has yo-yoed today, falling to less than a pound a share before rocketing up and then plummeting again. While a Lloyds purchase of HBOS could trigger monopoly concerns, several bankers close to the talks said the government was prepared to ignore competition issues in the short term. More »

(Newser) - If you'd told economists 18 months ago what lay ahead in the financial industry, predictions for the American economy would be dire. The fact that things aren't totally awful—we still haven't entered into a recession—is testament to the good defense of Hank Paulson and Ben Bernanke. What they aren't doing, writes David Leonhardt in the New York Times , is fixing the underlying problems that led to Lehman's failure and AIG's bailout. More »

(Newser) - As the credit market self-destructed, Merrill Lynch and Lehman Brothers faced similar problems. The difference, Henry Blodget writes in Slate, is that Merrill’s John Thain played his cards right, and Lehman’s Dick Fuld didn’t. Brought in to clean house after Stan O’Neal’s high-risk strategy exploded, Thain immediately cleaned up the balance sheet. Making the best of bad options netted shareholders $50 billion. More »

(Newser) - Fannie and Freddie have been nationalized, Lehman has collapsed, Merrill Lynch has been bought out—an economic disaster, right? Not really, Anatole Kaletsky writes in the Times of London: The US economy is actually showing signs of improvement. More than ever, "there is no contradiction between expecting a recovery, or at least stability, in the US economy and chaos in its financial system." More »

(Newser) - Lehman Brothers gasped its last breath this morning, filing for Chapter 11 protection in Manhattan under a crushing $613 billion in debt, the largest—and potentially most frightening—bankruptcy in US history, reports Bloomberg. Experts say the filing is likely to trigger a domino effect in the US economy. More »

(AP) - The troubled department store chain Boscov's filed for Chapter 11 bankruptcy protection today, becoming the latest victim of the harsh consumer spending environment. The Reading, Pa.-based chain said it will close 10 of its 49 stores, citing sluggish consumer spending and credit issues—and acknowledging that some of its suppliers had stopped shipping merchandise to the company—as contributing factors. More »

(Newser) - In a move that has hundreds of restaurants closed and thousands of workers laid off, casual-dining chains Bennigan’s and Steak & Ale filed for bankruptcy today, the Wall Street Journal reports. Sources say the restaurants’ parent company—which violated a lending agreement this year—had put off declaring bankruptcy for months as it negotiated with lenders.