How Worried Should You Be?

Brokerage customers have some protections. Your accounts may not be protected from falling securities prices; if you owned Lehman stock, you already know that you've lost a bundle. But they are protected from the brokers themselves going under or getting sold by the Securities Investors Protection Corp., a reserve fund that does for brokerage customers what the FDIC does for bank depositors. Lehman brothers carved out its retail brokerage business from its bankruptcy filings, so folks with those accounts might not even need that insurance.

"It appears that all customer cash, stocks and other securities are accounted for," said SIPC President Stephen Harbeck. "SIPC has not initiated a liquidation proceeding against the broker, dealer Lehman Brothers Inc., and we do not currently anticipate doing so."

Those accounts will ultimately be transferred to other brokerage firms, but the SEC said customers will not lose access to their accounts during the period when Lehman's holdings are liquidated and transferred.

Merrill account holders have even less cause for immediate concern. The firm remains solvent, and in the event of a takeover by Bank of America, there's no reason to believe the securities and cash held in those accounts wouldn't remain stable. But account holders in those two firms can ask themselves this other question: Should they be paying top dollar for investment advice from companies that couldn't even keep themselves safe? 

Investors might use the opportunity of the shifting financial landscape to adjust their own accounts to discount brokerage firms, which are similarly insured by SIPC but which charge less and don't give the same kind of investment advice. A portfolio of inexpensive, diversified mutual funds bought at the lowest possible cost might be a better solution for long-term investors.

Keep safe money safe. So far this year, there have been 11 bank failures that required FDIC coverage of depositors' funds. So make sure your deposits stay under FDIC limits (find them at FDIC.gov). Money-market mutual funds are reportedly safe, and investment-company issuers tend to bolster their own funds when they threaten to lose value. But since some money funds do own corporate debt, like that of Lehman Brothers, it makes sense to be absolutely certain.