Weekends are normally a quiet time on Wall Street as the U.S. markets are closed and trading is halted. However, lately they have become a fearful stretch of time for the U.S. finance industry. Recent weekend developments include the failure and bailout of Bear Stearns, the seizure of IndyMac, the conserveratorship effort of Fannie Mae and Freddie Mac, and this weekend, the likes of Merrill Lynch and Lehman Brothers as victims in a forced merger and bankruptcy, respectfully. Just when the panic from the recent financial crisis has begun to subside, it is replaced by another. Outlooks indicate that there may be more dire weekend news to come, leading to the demise of yet another large financial institution. The question of which institution is next is on the minds of nearly everyone attuned to the financial markets and the economy.

Lehman Brothers

Last weekend, the Treasury Department overtook mortgage giants Fannie Mae and Freddie Mac in a $200 billion move to calm financial markets around the world and instill confidence. Many lauded the move during the week. As the week progressed, Lehman Brothers’ vulnerability hit the radar with a record quarterly loss of $2.8 billion in June, the biggest in their 158 year old history, and capital and liquidity problems. The firm was a major player in the market for subprime and prime mortgages and is one of the smaller mega-firms on Wall Street firms.

Their stock plunged, wiping out nearly half of their value. At one time their stock traded at $82.00 a share. They ended up as the next casualty by filing for emergency bankruptcy. This time, the Treasury Department was not opening its wallet to save them as with they did with the $30 billion JP Morgan-Bear Stearns deal. While the firm’s CEO Richard S. Fuld Jr attempted to sell a “good bank”-“bad bank” master plan to investors that would have divided the company’s assets and losses, the walls caved in and the bottom fell out. Rooted in their troubles are troubled mortgages and real estate. A weekend effort to convince investors, potential buyers– including Barclays of Britain and the Bank of America, and Federal Treasury officials for financial rescue and backing, netted no takers on the plan. Those interested that held the financial wherewithal to undertake such a deal reportedly wanted a deal that was backed in part by the Federal Treasury as with the Bear Stearns– JP Morgan Deal deal. Perhaps preoccupied with the Fannie Mae and Freddie Mac deal just a week ago, the Treasury declined. Lehman started drafting Chapter 11 Bankruptcy and on Monday morning it was executed in New York. The fate of its roughly 25,000 employees is unclear, but many are expected to be laid off.

The filing brings to light what will potentially be the largest failure of an investment bank since the collapse of Drexel Burnham Lambert 18 years ago, the Associated Press reported. Lehman reportedly listed over $613 billion of debt in today’s filing. Creditors include Tokyo-based Aozora Bank Ltd. Mizuho Corporate Bank Ltd, and Citigroup Inc. unit.

Lehman Brothers Holdings Inc. is a 158 year old investment banking firm founded by three German immigrants, that is segmented into three business units; Capital Markets, Investment Banking and Investment Management.

Merrill Lynch

Wall street megafirm Merrill Lynch, last year valued at $100 billion dollars, agreed to be acquired by Bank Of America in a stock swap estimated at $50 billion dollars, or $29.00 per share. Merill Lynch made the move to avoid the failure that the deepening financial crisis– rooted in bad negative finance, mortgage, and real estate investments– is encouraging. Merrill Lynch had disclosed losses of more than $45 billion on its mortgage investments. The future of its 60,000 employees is up in the air.

Merrill Lynch functions as two entities. The first is a lucrative wealth management firm with an estimated $1.8 trillion of assets, and an estimated 16,000 brokers. It also holds an interest in an entity called Black Rock, a growing asset management firm which has increased its profits over 70% from the year before.

Merrill’s other arm is defined as bond trading firm that undertakes high risk-high return purchasing and selling ventures. It had invested heavily in securities backed by subprime mortgages. In October of 2007 this arm reported a write-off of $8.4 billion to realize the loss of value in these securities. The disclosure ended the reign of Chief Executive Officer E. Stanley O’Neal.

Reportedly, Bank of America had approached Merrill Lynch earlier in the year to discuss acquisition, but at the time, Chief Executive John A. Thain was against the offer. The fall of Lehman, Merrill’s worsening credit position,  and exposure due to the subprime crisis, made this situation more critical and its executives more willing. A weekend negotiation and analysis produced a solidified deal by Monday morning. This is Bank Of America’s second acquisition of a troubled financial firm in recent history. It purchased Countrywide Mortgage earlier this year. It was also reported that they have been engaged with talks about buying Lehman Brothers over the weekend as well. The new combined group will be called Merrill Lynch Wealth Management.