The recent forced bankruptcy of Lehman Brothers, rushed rescue effort of American International Group by the federal government and the falling stocks on Wall Street have not been good for the financial sector.

Managerial Studies Adjunct Professor Timothy Logan summarized the situation, saying the contraction of bank assets is forcing investors to turn to treasuries, and the government may not sustain all of the financial losses.

"Tightened lending standards due to uncertain economic reasons leads to less money in the people's hands," said Logan. "Because it is a vicious cycle, the situation is teetering on catastrophic."

Economics Senior Lecturer Stephen Buckles weighs in on the actions the Federal Reserve can take to alleviate the problem.

"They are doing all that they can right now," said Buckles. "The regulatory role is going to have to change dramatically and that is going to be the biggest challenge — to do it (in) a way that encourages an active and healthy financial market."

Logan predicts the "free wielding lending over the past five to seven years is over, and future projects will have more conservative lending terms. Rules for mortgages will be changed as well, and it will be generally much tougher to receive one."

The future is looking uncertain for remaining giant Wall Street firms such as Goldman Sachs and Morgan Stanley. Both firms have suffered significant losses in stock shares this week alone.

"I don't know if there are more to come," Buckles said. "I hope not, but it would not be surprising to find another one or two."