Despite efforts to stabilize shaky financial markets with a huge influx
of cash, nervous investors are still worried that some large banks
might fail.
Much of the focus is on Goldman Sachs and Morgan
Stanley, two large, independent U.S. investment banks that have so far
managed to survive the housing and credit crisis.
Shares of both
banks have plummeted this week, and some economists say mounting loses
could soon make it impossible for the two banks to raise enough cash to
stay in business.
Officials at Goldman Sachs and Morgan Stanley
have been trying to answer those concerns by exploring possible mergers
or by selling stakes to other banks in the U.S. and around the world.
So
far, the efforts have not reassured investors, who are selling large
quantities of the stock, making it even harder for the companies to
raise cash.
Two of the biggest U.S. investment banks, Bear
Stearns and Merrill Lynch, have already been forced to sell themselves
to other banks, while a third, Lehman Brothers, filed for bankruptcy.
Investors
are also concerned about the fate of one of the biggest U.S. savings
and loan banks, Washington Mutual. It has been hit hard by the housing
and mortgage crisis and news reports say it has put itself up for sale.
Meanwhile, London-based Lloyds TSB reached a deal to buy
Halifax Bank of Scotland (HBOS) for nearly $22 billion. Shares of HBOS
have plummeted in recent days.
Also Thursday, Dow Jones and
Company said it would remove insurance giant American International
Group from the Dow Jones Industrial Average as of Monday.
AIG
agreed to an $85 billion U.S. government bailout this week. Dow Jones
officials say they are making the change because AIG is now effectively
controlled by the U.S. government, and because of its low stock price.
The 112-year-old stock index is considered a prime indicator of the U.S. economy.
Some information for this report was provided by AP and Reuters.
