Sept. 16 (Bloomberg) -- Wall Street had Daniel Palladino rattled. He couldn't put his finger on why.

``I'm trying to absorb all this,'' said Palladino, 48, a television writer, as he had coffee yesterday at the Farmer's Market in Los Angeles and read newspaper accounts of the demise of Lehman Brothers Holdings Inc.

The significance of the 158-year-old New York firm's bankruptcy filing eluded him, he said. ``I don't know more than anyone else, financially,'' he said. ``A bank to me is an ATM and a checking account.''

Like many Americans interviewed yesterday, Palladino wasn't clear how or even whether the turmoil on Wall Street would affect him. Linda Burke, 57, a customer service consultant with AT&T Inc. in Atlanta, said she figured her retirement savings would take a hit and added that she was angry, though she wasn't sure at whom.

``If I knew more,'' she said, ``I could find someone to blame.''

Lehman's bankruptcy filing, the biggest in U.S. history, followed Merrill Lynch & Co.'s decision over the weekend to sell itself to Bank of America Corp. Last week, the U.S. government took over Fannie Mae and Freddie Mac, the mortgage finance companies. Six months before that was the forced sale, backed by the government, of Bear Stearns Cos. to JPMorgan Chase & Co.

Ripple Effects

The reshaping of the U.S. financial industry is bewildering to ``folks who don't live and breathe this stuff,'' said Jim Behrens, president of Ralls County State Bank in New London, Missouri. Now ``people are paying attention.''

And they'll feel the ripple effects from what's happening on Wall Street, if they haven't already, said Bill Cockrum, a professor of finance and entrepreneurship at the U.C.L.A. Anderson School of Management in Los Angeles.

Because of the credit crunch, ``banks are becoming more conservative,'' he said. ``For the man on the street, that means money and favorable terms are harder to get.''

In Independence, Missouri, Blue Ridge Bank & Trust has tightened its loan requirements, said William Esry, the bank's president.

``If you wanted to buy a $100,000 house with 20 percent down,'' he said, ``now you may have to put 25 percent down.''

The impact yesterday was clear for Jan Ziebell, 66, a retired probation agency employee from Pewaukee, Wisconsin, who was vacationing in Manhattan when the Standard & Poor's 500 Index fell the most since the September 2001 terrorist attacks.

``We're watching our nest egg for retirement shrink,'' Ziebell said.

`We Ought to Sue'

Jay Leslie, 60, of East Brunswick, New Jersey, said he may not be able to retire as planned in five years.

``I may have to work longer,'' said Leslie, who sells women's clothes. He said he blamed Washington, not Wall Street. ``The government didn't have any idea how serious this was,'' he said.

That wasn't the view of Gary Jones, 67, an Atlanta retiree who said he was ``so concerned I stayed up the last two nights moving my money into T-bills and other safe havens.''

``We ought to sue the heck out of every board of director for the last 10 years,'' he said.

For Shelley Sims, 44, who lives in Lawrenceville, Georgia, and works for Georgia Pacific LLC's import-export division, the failure of storied companies was a wake-up call. She said she would start paying more attention to financial markets.

Not That Bad

``When you see names like these in the news, it's alarming,'' Sims said. ``It made me get my mortgage papers and investment documents.''

For Chaz Harris, the developments didn't convince him that the U.S. was in any trouble.

``The economy's pretty bad, but people are still spending money on what they want,'' said Harris, 20, an unemployed warehouse worker who lives with his parents in Weehawken, New Jersey. Referring to the Take-Two Interactive Software Inc. video game, he said, ``I mean, `Grand Theft Auto' did half a billion in seven days. So the economy's not that bad.''

To contact the reporters on this story: Michael Janofsky in Los Angeles at mjanofsky@bloomberg.net; Laurence Viele Davidson in Atlanta at lviele@bloomerg.net.

Last Updated: September 16, 2008 14:11 EDT