Dealers scramble for collateral as Lehman CDS unwinds begin

Volumes traded in the credit default swaps market were enormous and ranges were huge during a remarkable week in which Lehman Brothers filed for Chapter 11 bankruptcy, Merrill Lynch sought and found a buyer in Bank of America, the US government bailed out AIG with a $85bn loan, and the two sole remaining broker dealers, Morgan Stanley and Goldman Sachs were left vulnerable and potentially looking for merger partners.