A Wall Street Domino Theory - New York Times

News Analysis

A Wall Street Domino Theory

By JENNY ANDERSON and VIKAS BAJAJ

Published: March 15, 2008

The Federal Reserve’s unusual decision to provide emergency assistance to Bear Stearns underscores a long-building concern that one failure could spread across the financial system.

A Wall Street Domino Theory - New York Times: "“You get to where people can’t trade with each other,” said James L. Melcher, president of Balestra Capital, a hedge fund based in New York. “If the Fed hadn’t acted this morning and Bear did default on its obligations, then that could have triggered a very widespread panic and potentially a collapse of the financial system.”

Already, investors are considering whether another firm might face financial problems."