Instead of building up suspense, just know that no matter what happens to Wall St., your savings, insurance, etc. is still going to be there. The Fed has got our backs. For example, despite the failings of Lehman Brothers or Merrill Lynch, investors are protected by the Securities Investors Protection Corp – a reserve fund. Even if such firms are liquidated, customer accounts will remain active and protected as they are shifted to other brokerages. You could even take this opportunity to find a discount broker.
So the world won’t end, but what does all this mean to you? Well, the economy is going to be shaky for a while. Consumers — and now banks and brokers — are burdened in debt, and doesn’t look likely to change anytime soon. To make matters worse, there will be more layoffs, interest rates will do down, and small chance of raises.
Once this financial crisis gets past the worst of it, there will be a deep breath then a tightening down. It is well known now that a major contribution was a loose and care-free lending process. Criteria for loans will be much more stringent in the future because lenders will want to know for sure that you can pay them back.
