FINANCIAL MELTDOWN: Wall Street Banks Collapse; All Eyes On Stock Market

In what has been described as "one of the most dramatic days in Wall Street's history," Merrill Lynch agreed to sell itself on Sunday to Bank of America for roughly $50 billion and Lehman Brothers announced it will file for bankruptcy. Merrill Lynch has 60,000 employees and Lehman has 25,000 employees.

The news of the shakeup comes just days after the government announced a takeover of federally-sponsored mortgage lenders Fannie Mae and Freddie Mac and in the midst of what some see as a deepening economic crisis in the country.

The Wall Street Journal called it "a day in which the U.S. financial system was shaken to its core" and reported that the government's decision not to bailout Lehman "touched off a nerve-wracking test of the U.S. financial system's ability to hold itself together amid the worst series of shocks it has faced in decades."

"The humbling moves, which reshape the landscape of American finance, mark the latest chapter in a tumultuous year in which once-proud financial institutions have been brought to their knees as a result of hundreds of billions of dollars in losses because of bad mortgage finance and real estate investments," the New York Times reported today.

Meanwhile, a major national insurance company, American International Group, reportedly requested $40 billion in assistance from the Federal Reserve in order to survive, and there was also some fear that Washington Mutual, the nation's largest savings and loan, might collapse as well, the Times reported.

The new developments in the banking world could also force the presidential candidates to refocus their attention on the domestic economy and announce serious responses to what could be a financial meltdown in the making, according to Politico.com.

With high gas prices and consumer prices on the rise as well, the economic woes are hitting main street as well as Wall Street. Unemployment reached a five-year high last month, the government reported on Friday, and mortgage foreclosures hit a record of their own.