An Iowa financial advisor urges calm as stock markets globally are tumbling after a large U.S. investment banking firm, Lehman Brothers, filed for bankruptcy early today. Jim Tausz, of the Bradford Financial Center in Clarion, says Iowans must realize, this is not cause for panic.
Tausz says: "This doesn’t have anything to do with your checking accounts and your savings accounts and your C-Ds or your local bank, absolutely has nothing to do with that. Lehman Brothers is not that kind of a bank. They’re an investment bank and it’s going to effect some institutions out there."
Those institutions include Merrill Lynch which is now being purchased by Bank of America for 50-billion dollars. Lehman Brothers reportedly had some 60-billion dollars in sour real estate holdings, prompting today’s bankruptcy filing. Tausz says what’s happening is normal.
"You’re seeing some contracting of some financial institutions and some expansion," he says. "It’s going to be a topsy-turvy week in the market but I think these are all good things. When you’re not doing well and you haven’t done a good job in managing and you haven’t done a good job with your investments, this is what happens in America." Tausz says, "It’s a natural American thing."
On Wall Street, the Dow lost more than 300 points in the opening minutes of trading. Stocks around the world are also dropping in reaction to the financial shake-ups.