The fundamental difference between Lehman's situation and Bear's is that Lehman cannot lean on the U.S. Government as a backstop (i.e., share in potential losses); that is why Barclays stepped away. In addition, with BoA having just bought Merrill, another potential buyer is now gone.

Any contractual unwinds will be thorny as Credit Default Swaps will need to be verified and valued; finding offsets, interpreting contractual terms, and determining counterparty viability will also be very challenging issues.

Lehman employees will certainly go through some pain as they were compensated, in a significant way, with Lehman stock, and the company was 25-30% employee-owned. Also, Lehman's bankruptcy will take needed liquidity (i.e., wholesale financing, primary and secondary fixed income/derivatives trading) out of the marketplace.

As for Merrill, BoA gains an extensive broker network (retention packages will be worth watching), and a profitable share of Blackrock's business.

The rest of Merrill's business will be able to take advantage of BoA's low cost of funding (long-term credit rating of AA- by S&P). Now, the US Treasury has one less broker-dealer to worry about. Merrill shareholders will receive a non-taxable gain (at the expense of BoA shareholders); but with the sale of Merrill, there will be one less counterparty with which trading firms can transact with.