US Banking System Faces Shakeup

Financial lenders are facing a major industry reorganization Monday that promises to change the face of banking in the United States.

On Sunday, Merrill Lynch agreed to sell itself to Bank of America for some 50 billion dollars. Experts say the move will make the nation's prime lender even bigger.

Earlier Sunday, talks aimed at stabilizing Lehman Brothers ended after Bank of America and Britain's Barclays Plc decided against buying the 158-year-old investment bank.

Lehman was once the fourth-largest investment bank in the United States, but bad investments in real estate and other areas brought a drastic fall in the value of Lehman shares recently.

Late Sunday night, the U.S. Federal Reserve announced several initiatives to make it easier for financial institutions to get emergency loans from the U.S. central bank. The Federal Reserve said the initiatives were intended to lessen potential disruptions to the financial market.

In a separate move late Sunday, a group of 10 global banks and securities firms announced a 70-billion-dollar loan program that the companies could use to help ease a potential credit shortage. Each of the banks contributed seven billion dollars to the fund. Any bank in the group would be allowed to borrow from the combined pool of money.

Government and banking officials are concerned that the failure of a large institution like Lehman Brothers could shake confidence in the financial system and hurt the value of other firms.

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