As Wall Street struggled last week through one of its worst crises since the Great Depression, the Los Angeles financial industry didn't escape the turmoil.

Panicked investors phoned their brokers while insurance customers fretted over policies. Banks began assessing their exposure to the struggling companies. Hedge fund managers hoped for a miraculous turnaround in the markets.

Some of L.A.'s wealthiest residents did not escape the carnage, either, with some sustaining losses of possibly a billion dollars or more due to the government bailout of insurance giant American International Group Inc.

Moreover, as the week neared end, it appeared the region's second largest depository institution, Washington Mutual Inc., the Seattle-based thrift, was about to get gobbled up by a competitor, which would redraw the banking and thrift landscape here.

"It's a major reshuffling of the deck," said Lloyd Greif, president of Los Angeles-based Greif & Co., a middle market mergers and acquisition firm. "We're going to see new players emerge. It's a brave new world and it is I hate to say it the Great Depression of 2008."

The turmoil on Wall Street last week, which included the bankruptcy of investment bank Lehman Brothers and the acquisition of Merrill Lynch by Bank of America Corp., hit New York harder than Los Angeles. In the span of just a few days, billions of dollars in shareholder equity was wiped out and several of the country's largest financial institutions ceased to exist as independent companies all stemming from toxic home loans, many made and sold in Southern California.

But, for Los Angeles, the crisis followed by just months the upheaval caused by the area's unenviable position as ground zero for the subprime fiasco which saw the sale of giant Countrywide Financial Corp. and the failure of IndyMac Bancorp and other lenders causing thousands of immediate local job losses.

So, by the end of the week, local financial players were counting at least some blessings.

"This is a case where L.A. has, by and large, dodged the bullet," said Nancy Sidhu, a senior economist with the Los Angeles County Economic Development Corp. "This is nice because we caught all the bullets that were flying last year when the subprime mortgage problems broke out."

Bated breath

Still, there are thousands of Southland jobs and untold amounts of money at risk as the local financial services industry is reshaped in the coming months.

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