The upheaval in the American financial system sent shock waves through the stock market Monday, producing the worst day on Wall Street in seven years as investors digested the failure of one of its most venerable banks and wondered which domino would be next to fall.
The Dow Jones industrial average lost more than 500 points, more than 4 percent, its steepest point drop since the day the stock market reopened after the Sept. 11, 2001, attacks. About $700 billion evaporated from retirement plans, government pension funds and other .
The carnage capped a tumultuous 24 hours that redrew U.S. finance. Lehman Brothers, an investment bank that predates the Civil War and weathered the Great Depression, filed the largest bankruptcy in American history. A second storied bank, Merrill Lynch, fled into the arms of Bank of America.
John McCain still believes the fundamentals of the nation’s economy are strong even as the uncertain fate of two of Wall Street’s oldest institutions sent stocks tumbling.
In remarks to a crowd of several thousand in this pivotal electoral state, the Arizona senator said he agreed there should be no taxpayer-financed bailout of Lehman Brothers even as the investment banking giant filed for bankruptcy. Meanwhile, Merrill Lynch was selling itself to Bank of America for less than half of the iconic brokerage firm’s recent value.
Reacting to the turmoil on Wall Street, the Dow dropped some 300 points.
“Our economy, I believe, still, the fundamentals of our economy are strong, but these are very, very difficult times, so I promise you: We will never put America in this position again. We will clean up Wall Street,” McCain said.
The GOP nominee underscored his message with a new campaign television commercial that seemed to contradict his rosier assessment of the country’s economic health.
John, I think if you spoke with jobless people, or older Americans whose comfort in retirement is jeopardized by Wall Street’s problem, you might realize that our economy is not as strong as you might think it is.