The U.S. investment bank Lehman Brothers announced it is filing for bankruptcy. Government and banking officials believe the failure of a large institution, like Lehman Brothers, could shake confidence in the financial system and hurt the value of other firms. Also, on the horizon, a rescue plan for American International Group. Shares of AIG, fell more than 50 percent in early trading on reports the nations largest insurer turned to the Federal Reserve for $40 billion in financing to ward off a crisis.
President Bush says the White House is working to “reduce disruptions and minimize the economic impact on the broader economy.” From the Rose Garden, in a joint statement with President Kufuor of Ghana, Bush said, ”Short run adjustments in the financial markets can be painful.” Treasury Secretary Hank Paulson, blames the housing crisis on the financial institutions current status. He says it will be “months” not years before the housing situation can turn around. Democratic Presidential candidate Barack Obama says with the shake up in the financial markets and Wall Street, the financial system needs to be modernized. The Illinois Senator contends, “This turmoil is a major threat to our economy and its ability to create good-paying jobs and help working Americans pay their bills, save for their future, and make their mortgage payments.”
The White House is reassuring America’s financial system is safe. But, is it time to rethink how you save and invest your money? Are you confident your money is safe as Wall Street is scratching its head?