My Note -
Did the Feds and Treasury as the Bank of Japan if they would purchase Lehman? Something is way wrong with this picture and they certainly knew that Merrill Lynch was a problem long before September 17, 2008 – because there were already efforts to rescue them . . .
Uncle Henry “Hank” Paulson Continues Congressional Testimony – but what did he mean, “The Fed could loan money to Lehman in bankruptcy” – he said that today in testimony – why did taxpayers give Lehman free money during bankruptcy? who did it go to, Goldman Sachs to pay off counterparty risks? What kind of backroom money finagling is that?
- cricketdiane
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Lehman Brothers – beneficiaries ikikkk
Board of Directors
- Richard S. Fuld, Jr., Chairman and Chief Executive Officer[82]
- Michael L. Ainslie[82]
- John F. Akers[82]
- Roger S. Berlind[82]
- Thomas Cruikshank[82]
- Marsha Johnson Evans[82]
- Sir Christopher Gent[82]
- Roland A. Hernandez[82]
- Dr. Henry Kaufman[82]
- John D. Macomber[82]
Former Officers
- Richard S. Fuld, Jr.
- Tom Russo
- Scott J. Freidheim
- Bart McDade
- Joe Gregory
- Ion Lowitt
- Jessie Bhattal
- Jeremy Isaacs
- Skip McGee
- George Walker
- Michael Gelband
See also
Scott J. Freidheim, former Chief Administrative Officer subsequently took a job for Sears Holding Corporation
http://en.wikipedia.org/wiki/Lehman_Brothers
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JPMorgan Gave Lehman $138 Billion After Bankruptcy (Update3)
By Tiffany Kary and Chris Scinta
Sept. 16 (Bloomberg) — JPMorgan Chase & Co. gave $138 billion this week in Federal Reserve-backed advances to the broker dealer unit of Lehman Brothers Holdings Inc. to settle Lehman trades and keep financial markets stable amid the biggest bankruptcy in history, according to a court filing.
One advance of $87 billion was made on Sept. 15 after the pre-dawn bankruptcy filing, and another of $51 billion was made today, Lehman said in court documents. Both advances were made to settle securities transactions with customers of Lehman and its clearance parties, according to the filing.
The advances were necessary “to avoid a disruption of the financial markets,” Lehman said in the filing.
The first advance was repaid by the Federal Reserve Bank of New York on the night of Sept. 15, Lehman said. JPMorgan said in a statement that the $51 billion advance was also repaid and the process will zero out the advances at the end of each day.
U.S. Bankruptcy Judge James Peck in Manhattan approved an order confirming that advances JPMorgan is providing are covered by existing collateral agreements with Lehman and its affiliates. JPMorgan holds about $17 billion in collateral to secure the money it advances to clear the trades, Lehman attorney Richard Krasnow said.
[ . . . ]
Requests to obtain a bankruptcy loan and schedule the sale of Lehman assets were postponed until tomorrow.
JPMorgan said in a statement before the hearing that it would “be unable to continue” making future advances needed to settle trades unless the court granted its claims special status.
Both advances were “guaranteed by Lehman” through collateral of the firm’s holding company under an agreement reached in August, according to the filing. The advances were made at the request of Lehman and the Federal Reserve, according to the filing.
Lehman disclosed the advances in a motion seeking court permission to give JPMorgan’s claims special status in its bankruptcy and to certify they are guaranteed by Lehman’s collateral.
[ etc. ]
Investment banks have been aiding or buying peers since the U.S. Treasury Department and the Federal Reserve established that its rescue of Bear Stearns Cos. in March hadn’t set a precedent and declined to save Lehman before it filed for bankruptcy with debt of more than $613 billion.
To contact the reporter on this story: Christopher Scinta in New York bankruptcy court at csinta@bloomberg.net and; Tiffany Kary in New York bankruptcy court at tkary@bloomberg.net.
Last Updated: September 16, 2008 18:36 EDT
http://www.bloomberg.com/apps/news?pid=20601110&sid=aiZ4hbo2tr44
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Lehman Brothers Sale Seems Unlikely
06/12/08 – 04:59 PM EDT
While the rapid deterioration at Lehman Brothers(LEH Quote), evidenced Thursday with the ouster of two top executives, has reminded many of Bear Stearns’ downfall, few expect the firm to meet the same fate.
Many investors fear that Lehman, which on Thursday ousted CFO Erin Callan and COO Joseph Gregory three days after it warned of massive loss for the second quarter, has some speculators floating names of potential buyers. Bear, on the verge of bankruptcy, in March agreed to sell itself to JPMorgan Chase(JPM Quote) after the firm’s stock was relentlessly hammered by rumors about its liquidity position. Bear shareholders approved the deal last month.
But several industry observers say Lehman can survive, because the firm’s situation is different in a lot of ways to the one Bear faced.
[etc.]
RealMoney.com contributor Doug Kass on Thursday speculated private equity firms Blackstone Group(BX Quote) or J.C. Flowers could take a minority stake in Lehman. Other sources told TheStreet.com private equity investor Citadel or money manager BlackRock (BLK Quote) also could be in the mix.
http://www.thestreet.com/story/10421130/lehman-brothers-sale-seems-unlikely.html
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http://chattahbox.com/business/2009/07/14/goldman-executives-unloaded-700m-of-stock-after-lehman-brothers-collapse/
(ChattahBox)—A Recent filing with the SEC revealed that Goldman Sachs executives sold stock worth nearly $700 million, soon after Lehman Brothers collapsed and during the time the firm received a $10 billion federal bailout.
These stock sales are sure to raise the ire of Congressional lawmakers, as Goldman is poised to announce one of its strongest ever second-quarter earnings, after paying back TARP funds to the U.S. government.
During an eight-month period, Goldman partners sold more than $691 million in company stock. A comparable period from September 2007 to April 2008, when stock prices were higher, shows Goldman executives sold only $438 million in stock.
Goldman officials say the unusually high stock sales by partners could have been in response to margin calls, because of the company stock put up as collateral for loans.
Stock sales by Goldman partners have always raised eyebrows, but certainly more so, when such a large volume of company stock was unloaded immediately after Lehman brothers went under.
In related news Goldman Sachs reported earnings profit surge of 65 per cent to $3.44 billion in the quarter ending June 26, this morning, Goldman Sachs, which recently returned bailout funds worth $10 billion to the Federal government, recorded second-quarter revenues to the tune of $13.76 billion.
Source
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Lehman’s bankruptcy is expected to cause some depreciation in the price of commercial real estate. The prospect for Lehman’s $4.3 billion in mortgage securities getting liquidated sparked a selloff in the commercial mortgage-backed securities (CMBS) market. Additional pressure to sell securities in commercial real estate is feared as Lehman gets closer to liquidating its assets. Apartment-building investors are also expected to feel pressure to sell as Lehman unloads its debt and equity pieces of the $22 billion purchase of Archstone, the third-largest United States Real Estate Investment Trust (REIT). Archstone’s core business is the ownership and management of residential apartment buildings in major metropolitan areas of the United States. Jeffrey Spector, a real-estate analyst at UBS said that in markets with apartment buildings that compete with Archstone, “there is no question that if you need to sell assets, you will try to get ahead” of the Lehman selloff, adding “Every day that goes by there will be more pressure on pricing.”[24]
Several money funds and institutional cash funds had significant exposure to Lehman with the institutional cash fund run by The Bank of New York Mellon and the Primary Reserve Fund, a money-market fund, both falling below $1 per share, called “breaking the buck“, following losses on their holdings of Lehman assets. In a statement The Bank of New York Mellon said its fund had isolated the Lehman assets in a separate structure. It said the assets accounted for 1.13% of its fund. The drop in the Primary Reserve Fund was the first time since 1994 that a money-market fund had dropped below the $1-per-share level.
Putnam Investments, a unit of Canada’s Great-West Lifeco, shut a $12.3 billion money-market fund as it faced “significant redemption pressure” on September 17, 2008. Evergreen Investments said its parent Wachovia Corporation would “support” three Evergreen money-market funds to prevent their shares from falling.[25] This move to cover $494 million of Lehman assets in the funds also raised fears about Wachovia’s ability to raise capital.[26]
About 100 hedge funds used Lehman as their prime broker and relied largely on the firm for financing. As administrators took charge of the London business and the U.S. holding company filed for bankruptcy, positions held by those hedge funds at Lehman were frozen. As a result the hedge funds are being forced to de-lever and sit on large cash balances inhibiting chances at further growth.[27]
In Japan, banks and insurers announced a combined 249 billion yen ($2.4 billion) in potential losses tied to the collapse of Lehman. Mizuho Trust & Banking Co. cut its profit forecast by more than half, citing 11.8 billion yen in losses on bonds and loans linked to Lehman. The Bank of Japan Governor Masaaki Shirakawa said “Most lending to Lehman Brothers was made by major Japanese banks, and their possible losses seem to be within the levels that can be covered by their profits,” adding “There is no concern that the latest events will threaten the stability of Japan’s financial system.”[28] During bankruptcy proceedings a lawyer from The Royal Bank of Scotland Group said the company is facing between $1.5 billion and $1.8 billion in claims against Lehman partially based on an unsecured guarantee from Lehman and connected to trading losses with Lehman subsidiaries, Martin Bienenstock.[29]
Lehman was a counterparty to mortgage financier Freddie Mac in unsecured lending transactions that matured on September 15, 2008. Freddie said it had not received principal payments of $1.2 billion plus accrued interest. Freddie said it had further potential exposure to Lehman of about $400 million related to the servicing of single-family home loans, including repurchasing obligations. Freddie also said it “does not know whether and to what extent it will sustain a loss relating to the transactions” and warned that “actual losses could materially exceed current estimates.” Freddie was still in the process of evaluating its exposure to Lehman and its affiliates under other business relationships.[30]
After Constellation Energy was reported to have exposure to Lehman, its stock went down 56% in the first day of trading having started at $67.87. The massive drop in stocks led to the New York Stock Exchange halting trade of Constellation. The next day, as the stock plummeted as low as $13 per share, Constellation announced it was hiring Morgan Stanley and UBS to advise it on “strategic alternatives” suggesting a buyout. While rumors suggested French power company Électricité de France would buy the company or increase its stake, Constellation ultimately agreed to a buyout by MidAmerican Energy, part of Berkshire Hathaway (headed by billionaire Warren Buffett).[31][32][33]
The Federal Agricultural Mortgage Corporation or Farmer Mac said it would have to write off $48 million in Lehman debt it owned as a result of the bankruptcy. Farmer Mac said it may not be in compliance with its minimum capital requirements at the end of September.[34]
In Hong Kong more than 43,700 individuals in the city have invested in HK$15.7 billion of “guaranteed mini-bonds” (迷你債券) from Lehman.[35][36][37] Many claim that banks and brokers mis-sold them as low-risk. Conversely, bankers note that minibonds are indeed low-risk instruments since they were backed by Lehman Brothers, which until just months before its collapse was a venerable member of Wall Street with high credit and investment ratings. The default of Lehman Brothers was a low probability event, which was totally unexpected. Indeed, many banks accepted minibonds as collateral for loans and credit facilities. Another HK$3 billion has been invested in similar like derivatives.
The Hong Kong government proposed a plan to buy back the investments at their current estimated value, which will allow investors to partially recover some of their loss by the end of the year.[38] HK Chief executive Donald Tsang insisted the local banks respond swiftly to the government buy-back proposal as the Monetary Authority received more than 16,000 complaints.[35][37][38] On October 17 He Guangbe, chairman of the Hong Kong Association of Banks, agreed to buy back the bonds, which will be priced using an agreed upon methodology based on its estimated current value.[39] This episode has deep repercussions on the banking industry, where misguided investor sentiments have become hostile to both wealth management products as well as the banking industry as a whole. Under intense pressure from the public, all political parties have come out in support of the investors, further fanning distrust towards the banking industry.
http://en.wikipedia.org/wiki/Bankruptcy_of_Lehman_Brothers
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