Wall Street struggled to regain its bearings on Monday, September 15, after Sunday’s stunning events that included the demise of Lehman and the sale of Merrill Lynch & Co. to Bank of America Corp. for $50 billion.

At Lehman’s headquarters near Times Square, reporters and photographers jostled with onlookers for position so they could ask devastated employees what it felt like to be part of the largest corporate bankruptcy in history, while many of Lehman’s 10,000 New York staffers remained inside polishing their résumés and bidding farewell to colleagues.

At the same moment, Bank of America began a press conference to show off its latest prize: the nation’s largest brokerage firm and its so-called thundering herd of well-heeled brokers. Buying Merrill will at last give the North Carolina-based institution the Wall Street presence it has long craved.

BofA chief executive Ken Lewis hinted at significant layoffs among Merrill’s 60,000 employees, though he said no decisions have taken place. BofA plans to cut $7 billion from Merrill’s costs base by 2012, which would equal 9 percent of the firm’s operating expenses last year.

One thing, at least, will stay: BofA announced it will keep the Merrill name for its wealth-management business.

Cutting costs will be important, Lewis said, because he doesn’t expect Wall Street to generate anything like the sort of revenues it has enjoyed in recent years.

“We’ve gone through a golden era of banking and financial services in general,” he observed. “It will be tougher” in the future to coin the kind of profits—not to mention pay the sorts of bonuses—to which Wall Street employees have grown accustomed.

For his part, Merrill chief executive John Thain was left to grimly observe that this is “the most difficult environment in the financial markets that I’ve experienced in my 30 years in the business.”

The news was equally grim at American International Group Inc., the nation’s largest insurer and the one in desperate need of capital after suffering tens of billions of dollars in mortgage-related losses.

In an unusual move, Gov. David Paterson stepped in and ordered New York state insurance regulators to let AIG borrow $20 billion using its own assets as collateral. Investors weren’t impressed, and AIG’s stock fell 55 percent. Later in the afternoon Treasury Secretary Henry Paulson made it clear there would be no federal bailout of the insurer.

The Dow Jones industrial average fell 504 points, or 4 percent, on Monday.

The impact of Lehman’s stunning demise will take weeks to fully understand, much less absorb. The firm is still shopping its highly regarded Neuberger Berman asset management unit, with several private equity firms reportedly expressing interest. Meanwhile, brokers and bankers are trying to ascertain their exposure to Lehman through complex derivatives trades.

Above all, Monday was a day of lamentation for Lehman employees and the firm’s many alumni.

Private equity executive Michael Madden, a former co-head of investment banking at Lehman, observed that he used to be a high-ranking official at two firms that vanished long ago, PaineWebber and Kidder Peabody. Now, Lehman is as good as gone.

“It’s just remarkable,” he said. “Unfortunately remarkable.”

Wall Street being Wall Street, of course, some were already seeking to profit from the demise of one of the market’s most fabled names. A coffee mug emblazoned with the Lehman Brothers logo and the slogan “Where Vision Gets Built” was being offered on eBay for $40.

Filed by Aaron Elstein of Crain’s New York Business, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

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