Stocks plunge on Merrill Lynch, Lehman Brothers news

Stocks plummeted on Wall Street Monday following the sale of Merrill Lynch to Bank of America and Lehman Brothers Holdings Inc.'s bankruptcy filing.

The Dow Jones industrials suffered their sixth-largest drop ever, falling more than 504 points. That fall is the sharpest drop since the terrorist attacks of Sept. 11.

Lehman Brothers' Chapter 11 filing is the biggest one ever on record. The company's collapse was the result of $60 billion worth of soured real estate dealings, combined with the credit crisis and a failed weekend buyout by a British bank.

Bank of America was able to swoop in and purchase Merrill Lynch for $50 billion in stock, essentially a shotgun sale.

The bankruptcy filing puts thousands of New Jersey employees in jeopardy. A number of employees showed up at Lehman Brothers' Jersey City offices to clean out their desks.

"Everybody's worried about their monthly payments that they need to pay," says employee Vivek Bhamodkar. "The situation is tough for everybody."

Lehman Brothers employees react to bankruptcy

For more on the bankruptcy, go to channel 612 on your iO digital cable box and select iO Extra.

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