LEH

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LEH
« on: September 15, 2008, 08:31:32 AM »
Stick a fork in Lehman Brothers......

this is what you get for having $631B in debt, 60B in worthless securities, excessive leveraging, and no risk control..

http://biz.yahoo.com/rb/080915/lehman_bankruptcy.html

Lehman to file for bankruptcy, plans to sell units
Monday September 15, 3:12 am ET
By Dan Wilchins


NEW YORK (Reuters) - Lehman Brothers Holdings Inc (NYSE:LEH - News) filed for bankruptcy protection, after trying to finance too many risky assets with too little capital, making it the largest and highest-profile casualty of the global credit crisis.
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The Chapter 11 filing did not include its broker-dealer operations and other units, such as asset management firm Neuberger Berman. Those businesses will continue to operate, although Lehman is expected to liquidate them. It said it is in advanced talks on selling its investment management division.

Lehman is one of the biggest investment banks to collapse since 1990, when Drexel Burnham Lambert filed for bankruptcy protection amid a collapse in the junk bond market.

Time is of the essence as Lehman sells assets. Customers are often reluctant to trade with dealers whose parent companies are in bankruptcy, so the longer Lehman waits to sell its broker-dealer unit, for example, the less it will be worth.

"Much of (Lehman's) asset value at the end of the day is tied up in its credibility, and that takes a significant hit early in a bankruptcy case," said Jack Williams, Resident Scholar at the American Bankruptcy Institute, and a professor at Georgia State College of Law.

The Chapter 11 filing represents the end of a 158-year old company that survived world wars, the Asian financial crisis and the collapse of Long-Term Capital Management but could not survive the global credit crunch.

Financial institutions globally have recorded more than $500 billion of writedowns and credit losses as the U.S. subprime mortgage crisis has spread to other markets.

Bankruptcy also represents a bad end to Chief Executive Dick Fuld's four-decade career at Lehman. Fuld, who piloted the investment bank through prior crises with aplomb, was widely seen as too slow to recognize Lehman's need to raise capital and shed bad assets.

Lehman had $600 billion of assets financed with just $30 billion of equity as of the end of August. Having so little capital meant that a 5 percent decline in assets would wipe out the value of the company, which investors saw as a real risk thanks to the company's billions of dollars of mortgage securities.

"Lehman decided to play chicken with the market, and they lost," said James Ellman, portfolio manager at hedge fund Seacliff Capital, late on Sunday.

Lehman listed its biggest unsecured creditors as Citigroup Inc, (NYSE:C - News) Bank of New York Mullin Corp, (NYSE:BK - News) Aozora Bank, (Tokyo:8304.T - News) and Mizuho Financial Group Inc. (Tokyo:8411.T - News). Citi and Bank of New York Mullin are trustees for Lehman bonds.

The investment bank, once the fourth-largest in the United States, had hoped to raise capital by selling off a stake in its investment unit, and use that capital as well as other funds to spin off some of its toxic assets to shareholders.

But that plan did not satisfy investors, who pushed Lehman's share price to just a few dollars, or rating agencies, who pressed the company to find a stronger partner.

The filing comes after a weekend of heated negotiations among regulators and Wall Street firms regarding Lehman's fate. The U.S. government refused to backstop Lehman's worst assets the way it backstopped Bear Stearns Cos Inc's sale to JPMorgan Chase (NYSE:JPM - News). Government officials told banks to support Lehman or else be prepared for more investment banks to lose investor confidence and fail.

But prospective bidders refused to buy Lehman without government support, people briefed on the matter said. In the end, Lehman was allowed to fail, and Bank of America Corp (NYSE:BAC - News) agreed to buy what was seen as the next weakest U.S. investment bank, Merrill Lynch & Co Inc. (NYSE:MER - News)

PIZZA AND BEER

For many of Lehman's 26,000 employees the outlook is likely to be gloomy with job losses expected to be substantial even if significant parts of the business can be sold.

At Lehman's headquarters in Midtown Manhattan on Sunday afternoon, men dressed in suits came and went, while some employees entered the building with what appeared to be empty duffel bags, then left with them full.

Others emerged with accordion files, binders stuffed with papers and full valises.

On Sunday night hundreds of Lehman employees were still in the office to clear their desks and pack personal belongings, according to an employee.

Many even opted to say their farewells with one last office soiree. "We are having pizza and beer," the employee said.

Markets are likely to be wary of what is ahead. Bankruptcy is a long, complex process where almost everything is done out in the open, as opposed to the veil of secrecy Wall Street uses to conduct deals.

"This isn't a manufacturer or retailer... so we don't have a very rich track record about how the issues will be addressed, and the classic signposts just aren't there," Williams said.

"Once the company goes into bankruptcy this is going to be an opportunity to look under the hood, and we might not like what we see."

« Last Edit: September 15, 2008, 08:40:18 AM by NYCbuckeye »

Re: LEH
« Reply #1 on: September 15, 2008, 09:28:50 AM »
I process the Credit Derivatives payments in various currencies for all of these Wall Street players and we were getting calls and e-mails from all over the world regarding Lehman. I honestly can't believe this.....first Bear....now Lehman. Old powerhouses are gone. There are more to come!

Re: LEH
« Reply #2 on: September 15, 2008, 09:37:49 AM »
I process the Credit Derivatives payments in various currencies for all of these Wall Street players and we were getting calls and e-mails from all over the world regarding Lehman. I honestly can't believe this.....first Bear....now Lehman. Old powerhouses are gone. There are more to come!

AIG is next

pmg911

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Re: LEH
« Reply #3 on: September 15, 2008, 10:00:20 AM »
I process the Credit Derivatives payments in various currencies for all of these Wall Street players and we were getting calls and e-mails from all over the world regarding Lehman. I honestly can't believe this.....first Bear....now Lehman. Old powerhouses are gone. There are more to come!

AIG is next

don't see it happening...    Gov't is in a position where they almost CAN'T let that happen. .     most people, even those in the market, just don't understand the implications of a firm like AIG failing...


Re: LEH
« Reply #4 on: September 15, 2008, 10:21:29 AM »
I process the Credit Derivatives payments in various currencies for all of these Wall Street players and we were getting calls and e-mails from all over the world regarding Lehman. I honestly can't believe this.....first Bear....now Lehman. Old powerhouses are gone. There are more to come!

add merrill lynch to that list...sold to Bank of America
When you're a kid from New York and you do it in New York, that lasts forever!

Re: LEH
« Reply #5 on: September 15, 2008, 10:35:15 AM »
I process the Credit Derivatives payments in various currencies for all of these Wall Street players and we were getting calls and e-mails from all over the world regarding Lehman. I honestly can't believe this.....first Bear....now Lehman. Old powerhouses are gone. There are more to come!

AIG is next

don't see it happening...    Gov't is in a position where they almost CAN'T let that happen. .     most people, even those in the market, just don't understand the implications of a firm like AIG failing...



the feds have enough burden on their back by taking on a $500 trillion book by FRE and FNM. and the unlimited open discount window to the top banks. AIG was a good business until they started investing in tier 3 derivatives. the govt let LEH fail. no reason why AIG couldnt. Insurance Co. Executive Life failed in the 80s, i see no reason why AIG failure is not possible...in any event, even if the feds did bail out AIG, equity holders lose out.

Re: LEH
« Reply #6 on: September 15, 2008, 11:58:30 AM »
AIG is finished..

NEW Real-time: 3.60  -8.54 (70.35%) 11:58AM EThelp

Re: LEH
« Reply #7 on: September 15, 2008, 01:29:50 PM »
Amazing... Feds are allowing AIG to use $20B from their current subsidiaries. THey are changing the rules of the game with accounting trickery or financial shenanigans.

pmg911

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Re: LEH
« Reply #8 on: September 15, 2008, 01:30:22 PM »
AIG is finished..

NEW Real-time: 3.60  -8.54 (70.35%) 11:58AM EThelp


6.40 last trade..

Re: LEH
« Reply #9 on: September 15, 2008, 01:30:48 PM »
I process the Credit Derivatives payments in various currencies for all of these Wall Street players and we were getting calls and e-mails from all over the world regarding Lehman. I honestly can't believe this.....first Bear....now Lehman. Old powerhouses are gone. There are more to come!

AIG is next

don't see it happening...    Gov't is in a position where they almost CAN'T let that happen. .     most people, even those in the market, just don't understand the implications of a firm like AIG failing...


you know better than most.  

how is washington going to bail out a company whose exposure is mostly overseas?

 

pmg911

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Re: LEH
« Reply #10 on: September 15, 2008, 01:38:20 PM »
I process the Credit Derivatives payments in various currencies for all of these Wall Street players and we were getting calls and e-mails from all over the world regarding Lehman. I honestly can't believe this.....first Bear....now Lehman. Old powerhouses are gone. There are more to come!

AIG is next

don't see it happening...    Gov't is in a position where they almost CAN'T let that happen. .     most people, even those in the market, just don't understand the implications of a firm like AIG failing...


you know better than most.  

how is washington going to bail out a company whose exposure is mostly overseas?

I don't know the answer there. .  and I could easily be wrong about it... 

I do know that implications of AIG failing are monsterous and will have broad implications across many financial markets...

Re: LEH
« Reply #11 on: September 15, 2008, 01:40:22 PM »
AIG is finished..

NEW Real-time: 3.60  -8.54 (70.35%) 11:58AM EThelp


6.40 last trade..


good bounce (mainly off the 20B subsidiary loan news), but i dont think the street is convinced. LEH also bounced from 3.90 to 5+ lintraday last week. bottom line with 50% loss in equity overnite, it would be difficult to maintain operating margins it needs to survive.
« Last Edit: September 15, 2008, 01:42:34 PM by NYCbuckeye »

Randomhero423

Re: LEH
« Reply #12 on: September 15, 2008, 09:43:49 PM »
my virtual stock exchange thing went from #1 to #51/82 in literally 2 hours.  damn

Re: LEH
« Reply #13 on: September 15, 2008, 10:46:51 PM »
now the feds are telling goldman and morgan to fund aig with 50B loan in addition to the 20B they were able to obtain today. yesterday they only needed 40B. at the end of business tommorrow, they will nee 85B. good luck.

Re: LEH
« Reply #14 on: September 16, 2008, 09:34:26 AM »
now the feds are telling goldman and morgan to fund aig with 50B loan in addition to the 20B they were able to obtain today. yesterday they only needed 40B. at the end of business tommorrow, they will nee 85B. good luck.

AIG is done.

Re: LEH
« Reply #15 on: September 16, 2008, 09:46:25 AM »
another 100K jobs will be lost...feds cannot help, they prob have approx. 800B in treasuries, they took on maybe 500B w/FRE and FNM. they cannot spot AIG the 70B needed due to the downgrade. if they do, they will risk US Treasuries being downgraded by international markets.

Re: LEH
« Reply #16 on: September 16, 2008, 02:06:46 PM »
Like I said the world is coming to an end. Greed has taken over and God is already here, the signs are all around us

Re: LEH
« Reply #17 on: September 16, 2008, 02:31:55 PM »
Like I said the world is coming to an end. Greed has taken over and God is already here, the signs are all around us

thanks for ruining this thread :)

Re: LEH
« Reply #18 on: September 16, 2008, 02:35:00 PM »
Like I said the world is coming to an end. Greed has taken over and God is already here, the signs are all around us

thanks for ruining this thread :)


HAHA Could be worse,like sitting here watching my annuity crumble

Re: LEH
« Reply #19 on: September 16, 2008, 02:40:32 PM »
Like I said the world is coming to an end. Greed has taken over and God is already here, the signs are all around us



thanks for ruining this thread :)


HAHA Could be worse,like sitting here watching my annuity crumble


if you have a variable annuity with a living benefit, your fine (as long as its not AIG)
« Last Edit: September 16, 2008, 03:55:23 PM by NYCbuckeye »