Lehmans

mr_magoo_5

chucky wrote: »

any potential suitor will want the deal that JP Morgan got for Bear Stearns - they'd be stupid not to.

the easy answer that why Lehman haven't been snapped up already is because they must have something very toxic or very unknown on their accounts/books.

this is a very individual situation so should not be considered that all investment banks are in this state - so please don't think that this is generic across the market.

Lehmans were one of the most trusted out of the US investment banks. They actually advertised to investors that their pension funds would be safe when they retired.
I tend to look across the board but see none standing out ATM, could you point out those which you would have us put our cash into?

napoleon

Lehman shares down another 10% today

Rumour has it it'll be rescued over the week-end while the markets are shut. If they don't it'll be carnage on Monday morning

WTF?_2

chucky wrote: »

Goldmans - they'll be making a very healthy profit from the Fannie and Freddie scenario.

JP Morgan are always a good bet too.

They seem to have a very good 'working relationship' (cough) with the Federal Reserve.


Plus they can afford to pay Tony Bliar a million quid a year (allegedly) so they must have money to burn.

sabretoothtigger

How will goldmans make a profit from fnm

I think Lehmans will come back, it does look they will need some vital sale of assets or backing to achieve this though. Though if they dont get that before the next fall in house results it'll be too late I guess

Generali

!!!!!!? wrote: »

JP Morgan are always a good bet too.

They seem to have a very good 'working relationship' (cough) with the Federal Reserve.


Plus they can afford to pay Tony Bliar a million quid a year (allegedly) so they must have money to burn.

JP Morgan have some form on this front. The original JP Morgan helped resolve the banking crisis of 1907 I think.

sabretoothtigger

BofA, JC Flowers, CIC planning joint Lehman Brothers bid

By Henny Sender in Hong Kong and Francesco Guerrera and Peter Thal Larsen in London
Published: September 12 2008 14:45 | Last updated: September 12 2008 15:46

Bank of America, JC Flowers & Co, the financial investor, and China Investment Co, the Chinese sovereign wealth fund, are considering a possible joint bid for Lehman Brothers, the embattled Wall Street bank.
According to people familiar with the matter, the BofA-led group is among those examining a rescue of Lehman, which is racing to find a buyer after shareholders, creditors and counterparties gave a thumbs-down to its efforts to survive as an independent entity. Barclays, the UK bank, is also interested.
Lehman shares were trading down more than 11 per cent at $3.74 in early-afternoon trading in New York.

A forced sale of Lehman Brothers at a fire sale price appears to be the most likely option in the wake of the massive drop in Lehman’s share price over the last few days, people familiar with the matter add. “The only question now is what price,” says one person who has been in discussions with Lehman over possible asset sales as well as with regulators.
While the details of any proposal haven’t yet been fully worked out, a bid from the BofA-led group may involve losses for holders of the debt as well as shareholders. That would be a dramatic departure from recent deals where holders of debt were saved even as shareholders suffered heavy losses.
Regulators will most probably remain on the sidelines, monitoring the situation but unwilling to offer any potential buyer the sort of guarantees that JP Morgan received in mid-March when it bought Bear Stearns.
Hank Paulson, Treasury Secretary, is adamant that there will be no government money involved in any rescue takeover, a person familiar with his thinking told the Financial Times. Instead, the US authorities will seek to facilitate a deal in other ways, for instance, if necessary, by showing flexibility on regulatory issues, such as treatment of private equity firms that may seek to participate in a deal

“Bear Stearns happened so quickly,” says one former Fed official. “At the time, there was no infrastructure to keep Bear alive. Now, there is an infrastructure to prevent a disorderly liquidation with the Fed willing to lend against good collateral.”
Moreover, while Bear Stearns was a big player in the credit default swap market, ran an important prime brokerage business and had a big role in the clearing system, Lehman poses less of a threat to financial stability, many of these people believe. ”Lehman may be the poster child for enough is enough,” says a senior executive at one major private equity firm that has been in talks with Lehman regarding possible asset sales.
BofA is widely seen as the US financial institution best placed to lead a Lehman takeover. The bank is currently integrating its purchase of Countrywide, the mortgage lender, and its chairman and chief executive, Ken Lewis, has previously suggested the bank is reluctant to expand in investment banking after recent losses. However, BofA may conclude that the opportunity to pick up Lehman at a distressed price may be too good to ignore.
Mr Flowers, a former Goldman Sachs partner who is close to BofA, currently manages about $3.2 bn of CIC’s money in a fund dedicated to taking stakes in financial institutions. The fund was established at CIC’s behest this spring after CIC had earlier been criticised for wasting China’s hard earned reserves as the value of its direct stakes in Blackstone and Morgan Stanley dropped.
The CIC fund complements a $7bn fund that Mr Flowers has just raised from a wider group of investors. Mr Flowers has structured that fund so that he can exercise control rather than take minority stakes as private equity firms have done in the past. CIC may invest additional sums in Lehman alongside Mr Flowers and Bank of America if the group decides to proceed with a bid.
A senior executive at CIC declined to comment, while Mr Flowers and BofA could not be immediately reached for comment. Lehman declined to comment.
Lehman is racing to find a buyer in order to prevent a further loss of confidence in the bank. Moody’s, the credit rating agency, has said it will downgrade Lehman unless the bank finds a larger partner. While Lehman has ample liquidity and access to a Federal Reserve liquidity facility, a downgrade would severely limit the bank’s ability to act as a counterparty in the financial markets.
There remains a slight chance that Lehman might be forced into a pre-packaged bankruptcy, some of these people believe, despite assurances from Lehman executives on the earnings call on Wednesday morning that the firm has a strong capital position and a modest leverage ratio.
Senior Lehman executives, including its top managers from Europe and Asia, are gathering at the bank’s headquarters in Manhattan to co-ordinate the rescue efforts.
At least since June, !!!!!! Fuld, Lehman’s embattled chief executive officer, has been refusing various deals that could have saved his firm, arguing that the price on offer was too low.
The discussions come amid significant confusion about Lehman’s value. Analysts have voiced considerable scepticism about the value Lehman has assigned to its $33bn commercial real estate portfolio. During a call this week, Lehman officials said the book was marked at about 85 cents on the dollar while its stakes in real estate investment firms Archstone-Smith and SunCal were carried at something less than 75 cents on the dollar. Lehman reported a net mark-to-market loss of $5.6 bn for the third quarter.
Lehman’s plight is sure to raise questions both about regulatory oversight and the consequences of mark to market accounting. Some bankers and private equity tycoons including David Bonderman, co-founder of TPG and a minority investor in troubled Washington Mutual, believe that in times of stress, such accounting treatment can lead to a death spiral. That’s because the sale of a small portion of assets at distressed prices can force a firm to mark down the value of all its holdings, leading to rising funding costs—the lifeblood of a securities firm - and plunging share prices.
Even before Lehman’s fate has been sealed, there has been quiet finger pointing, with the Securities & Exchange Commission likely to come under increasing criticism. That is because the SEC is supposed to monitor broker-dealers to ensure that they hold enough capital to support illiquid holdings such as Lehman’s real estate investments. But Lehman held these investments outside that entity, and thus avoided heavy capital charges to which regulators seemingly turned a blind eye.
If the regulators refuse to offer a sweetheart deal to a potential buyer, it will change the trading dynamic around troubled financial institutions, creating uncertainty about what was becoming a safe one-way bet. So far, shareholders have been almost completely wiped out while debt holders have been protected.

http://www.ft.com/cms/s/0/f3586ede-80ca-11dd-82dd-000077b07658.html?nclick_check=1

London equities were stronger on Friday helped by a steadier showing in the banking sector on news of bid interest in Lehman Brothers.
The FTSE 100 rose 1.9 per cent to 5,416.7, a gain of 98.3 points. The mid-cap FTSE 250 was 1.1 per cent higher at 8,976.7, a rise of 101.8 points.

Banks made progress as a rescue deal to prevent the collapse of the US investment bank moved closer. The FT reported that Bank of America, JC Flowers & Co, the financial investor, and China Investment Co., the Chinese sovereign wealth fund, were considering a possible joint bid for Wall Street’s most troubled institution.
Shares in Lehman, which has been hit by large losses, writedowns and the threat of credit rating downgrades, pared losses, falling 9.7 per cent to $3.81 in early trading in the US.
By midday in New York, the S&P 500 was 0.6 per cent lower at 1,248.47 and the Dow Jones Industrial Average lost 0.3 per cent to 11,398.54 after data showed US retail sales were worse than expected last month. These figures suggested that a key engine of the US economy, consumer spending, was stalling.
HBOS, seen as the UK bank most likely to need to raise fresh capital, bucked an overall positive trend in the sector with a 1.7 per cent loss to 282p. Barclays, which has previously been linked with a potential bid for Lehman, was 3.6 per cent higher at 350¾p. Royal Bank of Scotland was 2.4 per cent stronger at 239¾p.

http://www.ft.com/cms/s/0/7c3a40d2-809a-11dd-82dd-000077b07658,s01=1.html?nclick_check=1

Lehman Still Soliciting Bids For Asset Mgmt Ops - Sources
By Marietta Cauchi and Victoria Howley
Of DOW JONES NEWSWIRES

LONDON (Dow Jones)--Lehman Brothers Holdings Inc. (LEH) is still soliciting bids for its asset management business despite reports that the whole bank is being sold, people familiar with the situation told Dow Jones Newswires Friday.
The embattled bank is selling 55% of its investment-management division which includes asset manager Neuberger Berman. Lehman confirmed its intention to press ahead with the sale Wednesday when it reported third quarter earnings.
Lehman is expected to get five bids for the business ahead of Friday's deadline, having received initial expressions of interest from up to 11 potential buyers, one person said.
All five bidders are private equity firms and include Kohlberg Kravis Roberts & Co., Hellman & Friedman, Clayton Dubilier & Rice and Bain Capital, people said.
Lehman will then narrow the field to two parties, one person said.
The stake in the investment management business is expected to fetch some $3 billion, on the basis that the entire division is valued at $5 billion to $6 billion.
Whether or not Lehman will end up selling the business is unclear in light of reports that the investment bank is in talks with various parties about a bid for all of its operations.
Most recently the Financial Times reported that Bank of America Corp. (BAC), J.C. Flowers and China Investment Co., the Chinese sovereign wealth fund, were considering a joint bid.
However, negotiations over the sale of its asset management division would put a value on the business which can be used by Lehman in discussions for a complete takeover.

ad44downey

Lehman Bros. is far from being the only financial stock to be getting severely hammered :eek:

Wall Street rattled by Lehman uncertainty



Stand-out stocks continued to endure heavy losses on Friday, which have dragged some to their lowest in more than a decade.

American International Group tumbled another 30.8 per cent to $12.14 on Friday. Once the world’s largest insurer by market capitalisation, shares in AIG have lost more than 40 per cent this week.

Merrill Lynch slid another 12.3 per cent to $17.05, taking its loss to a third of its value at the start of the week
.
Meanwhile, shares in Lehman itself fell 13.5 per cent, in part due to doubts over whether the US Treasury would fund a deal. Over the week, shares in the 158-year-old institution have slumped 77.5 per cent.

Washington Mutual, which has sustained heavy losses in recent sessions, lost 3.5 per cent on Friday to $2.73 even after the lender said it would set aside less for bad loans in the third quarter. Over the week, it has lost 36 per cent.

Generali

ad44downey wrote: »

Lehman Bros. is far from being the only financial stock to be getting severely hammered :eek:

Wall Street rattled by Lehman uncertainty



Stand-out stocks continued to endure heavy losses on Friday, which have dragged some to their lowest in more than a decade.

American International Group tumbled another 30.8 per cent to $12.14 on Friday. Once the world’s largest insurer by market capitalisation, shares in AIG have lost more than 40 per cent this week.

Merrill Lynch slid another 12.3 per cent to $17.05, taking its loss to a third of its value at the start of the week
.
Meanwhile, shares in Lehman itself fell 13.5 per cent, in part due to doubts over whether the US Treasury would fund a deal. Over the week, shares in the 158-year-old institution have slumped 77.5 per cent.

Washington Mutual, which has sustained heavy losses in recent sessions, lost 3.5 per cent on Friday to $2.73 even after the lender said it would set aside less for bad loans in the third quarter. Over the week, it has lost 36 per cent.

I honestly wouldn't be surprised to see all 4 of those owned by someone else (possibly the US taxpayer) by the end of the month.

sabretoothtigger

In Mr Paulson’s eyes there are big differences between Lehman and Fannie and Freddie. The mortgage giants were vastly more important to the global financial system – their total liabilities are $5,400bn, a large chunk of which is held by foreign central banks whose support for the dollar is crucial. Fannie and Freddie were also much more important for the US economy, since they account for about three-quarters of all new US mortgages.

Moreover, their problems were rooted in their hybrid structure as “government-sponsored” private companies. Mr Paulson believed that the US government had caused this problem and was obliged to deal with it in a way that kept faith with the world’s investors. “Because the US government created these ambiguities, we have a responsibility to both avert and address the systemic risk,” he said last Sunday.

Mr Paulson also sees big differences between the situation at Lehman today and at Bear Stearns in March. The Treasury chief always insisted that he had intervened in March not to help Bear or its investors but to contain the systemic risks raised by its imminent failure. He sees the situation today as different for two main reasons: the markets have had six months to prepare for the possibility that Lehman could fail, and a new Fed facility ensures that it cannot suddenly run out of liquidity in the way that Bear did.

Aides have also advised Mr Paulson that Lehman is less involved in the vulnerable credit default swaps market – a market for insurance against defaults – than Bear was.

http://www.ft.com/cms/s/0/99da5928-80fa-11dd-82dd-000077b07658.html

edwinac_2

Generali wrote: »

Well it looks like Lehman Bros are going to be the next victims of the credit crunch... Korea Development Bank has been the only named buyer and now they've pulled out there must be serious doubts over their future.

Reuters, the financial "news" agency, has been putting out more false stories on the banking crisis.

(for background to this gigantic lie machine, see the staged photos Reuters just published from the Georgia conflict, and the "malicious" fabrications the agency cooked up last Monday to paint the Nationwide building society as "insolvent".)

This time, Reuters is putting out the false claim that KDB is still interested in buying out Lehman Bros.

Reuters' lies "sent Lehman's stock soaring".
[FONT=Arial,Helvetica,Geneva,Swiss,SunSans-Regular]
[/FONT]

[FONT=Arial,Helvetica,Geneva,Swiss,SunSans-Regular]
Lies and Lehman[/FONT][FONT=Arial,Helvetica,Geneva,Swiss,SunSans-Regular][SIZE=-1]

The investment banks are also in big trouble. Lehman Brothers, which has been shopping itself around looking for a savior, had proposed to sell a big chunk of itself to South Korea's government-owned Korean Development Bank, at a price 50% over book value. KDB chairman Min Euoo-sung, who had been the chief of Lehman's Seoul branch for three years before joining KDB in June, was in favor of the deal, and other Korean bankers saw it as an opportunity to expand their nation's role in the global financial arena. However, the plan was shot down by the government.[/SIZE][/FONT]

[FONT=Arial,Helvetica,Geneva,Swiss,SunSans-Regular][SIZE=-1]"After a review of its [Lehman's] account book, we found that its insolvency was serious," a senior government official stated, according to the Aug. 22 English-language edition of the Chosun Ilbo.[/SIZE][/FONT]

[FONT=Arial,Helvetica,Geneva,Swiss,SunSans-Regular][SIZE=-1]For a government official to publicly admit that a major investment bank is insolvent is extraordinary—and refreshingly honest!—but clearly, from the standpoint of the international bankers, totally unacceptable. A number of papers carried the Chosun Ilbo story, until Reuters, the British propaganda outlet, issued a false story claiming that KDB was considering buying Lehman anyway. The original story quickly disappeared, replaced by the phony one, which was touted enough to send Lehman's stock soaring. The lie prevailed, at least in the short term, in what was just another day at the office for the spin doctors.[/SIZE][/FONT]

[FONT=Arial,Helvetica,Geneva,Swiss,SunSans-Regular]Other Indicators[/FONT]
[FONT=Arial,Helvetica,Geneva,Swiss,SunSans-Regular][SIZE=-1]
As we have said repeatedly, there is no financial solution to the current crisis, only political ones. The current financial system has died, and what will replace it is a political question, one which is being fought out before our eyes, even though it is not identified in that way. On the domestic front, there are two significant elements which bear watching: the way in which the Presidential campaigns are being shaped to prevent any FDR-style recovery movement, and the relentless implementation of police-state measures. The development on the foreign front is the revival of the Cold War confrontationist policy against our alleged enemies. Under the Bush/Cheney regime it was the specter of "terrorists" everywhere, a specter now being replaced by the Russians. Behind it all lay the British puppetmasters, determined to manipulate America once again into a self-destructive, and self-defeating, stupidity.[/SIZE][/FONT]

[FONT=Arial,Helvetica,Geneva,Swiss,SunSans-Regular][SIZE=-1]The closer we get to the final, open disintegration of the financial system—the day the banks don't open, the day the economy stops—the louder the British brainwashing will be. The volume of the lies, financial, political, and military/security, is itself one of the best economic indicators we have. Don't think, be terrified, and let the "experts" decide your future. That's the plan, and it will work, unless we stop it.
[/SIZE][/FONT]