US bank collapses 'to have global effects'

15/09/2008

Two US banks have ceased trading - potentially having a very negative effect on the UK mortgage market.

Lehman Brothers has declared bankruptcy, while Merrill Lynch is to merge with its larger rival, Bank of America.

The stunning events, which came about due to both firms suffering from credit crunch-induced losses, are likely to have a very negative effect on investors' confidence in banks.

This is likely to impact on their balance sheets - and, as these banks make up many of the UK's largest mortgage lenders, on the consumer.

Mortgages and other forms of credit are likely to become even harder to come by, as the financial firms face up to further revenue losses.

The two banks' going under has caused consternation in Wall Street.

Speaking to the New York Times Peter G Peterson, co-founder of the private equity firm the Blackstone Group, commented: "I've been in the business 35 years, and these are the most extraordinary events I've ever seen."

Tags; Debt Management and Banking, Young Family Finances, Retirement Money Problems, Recent Graduate Debt,

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