Lehmans

Debt_Free_Chick

!!!!!!? wrote: »

The news was reporting that at the end of the day all the cash generated in London was wired to NY, with operating expenses supposed to be wired back the next working morning.

Surprise surprise, no cash came back after the Chapter 11 announcement. Reminds me a little of Enron where, according to a mate who worked there, a profitable UK operation was bled dry by the US parent corp and used as a dumping ground for debt at the end.

Very many companies do this. Imagine, sweeping up all the cash, worldwide and placing on an overnight deposit. It's worth it for the interest payments you get. This would have been pretty much an automated Treasury management process and I would expect the cash to be collected from every office in the World, not just the UK.

I work for an insurance company and we do this. Previously worked for an engineering company and they did it, too!

WTF?_2

blackanchorage wrote: »

Unfortunately none of the UK jobs are saved...

I resigned from Lehmans UK about three weeks ago. It seems that salaries are going to be paid for September; but can the liquidator cherry-pick whose salaries are paid? It's not going to benefit the firm too much to pay my salary, compared with somebody they want to keep on.

Thanks

Good news for you - according to the evening news the liquidators will pay this month's outstanding salaries.

So you can put off cancelling the poodle walker for another month

baby_boomer

!!!!!!? wrote: »

The news was reporting that at the end of the day all the cash generated in London was wired to NY, with operating expenses supposed to be wired back the next working morning.

To put this in some sort of perspective.

We're talking £5bn here to help smooth NY operations, which was supposed to come back on the Monday. It happened every week.

That's nearly 1/10 of the UK's take from basic rate income tax for an entire year!

I suppose any joker asking the question, "What if......" would have soon been in receipt of a P45 and a lousy reference.

Just like anyone asking other awkward questions.

WTF?_2

baby_boomer wrote: »

To put this in some sort of perspective.

We're talking £5bn here to help smooth NY operations, which was supposed to come back on the Monday. It happened every week.

That's nearly 1/10 of the UK's take from basic rate income tax for an entire year!

I suppose any joker asking the question, "What if......" would have soon been in of a P45 and a lousy reference.

Just like anyone asking other awkward questions.

They really were the "Masters of the Universe" throwing around those sorts of sums like it was monopoly money.

Now the investment banks are just 'Masters of Disasters".

poppy10_2

Germany's foreign minister is demanding an urgent explanation from state bank KfW as to why it transferred €300million to Lehman brothers the day it went bust. The company is blaming a 'technical error' for the failure to stop the automated payment. It is unlikely that it will be able to recoup the lost money.

Oops!

neverdespairgirl

Dithering_Dad wrote: »

Didn't they also say people would die if they travelled over 40mph (or some such figure) when the first trains were being invented.

There are doom mongers in every aspect of life I suppose, yet here we all still are, plodding along as usual.

I have a vague memory of reading that it was thought people's necks would break at over 30 mph.

neverdespairgirl

Generali wrote: »

There is no way that Lehmans will just go bust. Unwinding the derrivatives contracts would finish off just about every financial institution worldwide.

Someone will be found to take on the liabilities of Lehmans in some shape or another. That someone may well be the US taxpayer.

Is what has happened different from their just going bust? Or will the trouble you've spoken of happen now?

Generali

neverdespairgirl wrote: »

Is what has happened different from their just going bust? Or will the trouble you've spoken of happen now?

As I understand it Lehmans Holdings (the holding company that owns the rest of Lehmans and which probably has 20-30 employees) has been put in Chapter 11 protection. That means that their creditors can't sue them for the money they're owed while they restructure the business.

The Wealth Management and some other parts of Lehmans are still trading as normal entities.

In effect they have been allowed to go bust though - I made a prediction and it was wrong. In mitigation, the future is notoriously hard to predict.

The Treasury clearly decided that providing an implicit guarantee to the investment banking system was a step too far I and I think they are right to let Lehmans go bust.

Generali

chucky wrote: »

but if there are some functions/areas in the bank that are profitable and have a value if sold on - surely this is better than the firm just going bust and the vultures just descending on Lehman, breaking it up and buying these peices of the firm at a massive discount leaving less money for the creditors

Oh absolutely agree. If the money making bits can carry on making money they'll mitigate the losses to some extent. It's what I'd want to happen if I were a creditor.

Plasticman

Generali wrote: »

In mitigation, the future is notoriously hard to predict.

LOL. A classic quote! :rotfl:

I suspect that the main reason why the US government didn't bail out Lehmans was so it could save its money for more important problems (like AIG).