Lehman, its NOT going well!

[pinhead]

Re: Lehman, its NOT going well!

This is what I feared. They are all still too optimistic.
Thanks all for the help and information.

A couple links with more detail. Sounds like it was a waste.

http://www.cnbc.com/id/26707165

"But the bids and offers were extremely wide. A key problem: only one half of the trade has an incentive to get the deal done. If a participant owes money to Lehman, they have less incentive to clear the trade. If a participant is owed money by Lehman, they would love to clear the trade, but the price the other side is offering now is extremely high. "


http://www.ft.com/cms/s/0/2edc75ae-8...077b07658.html

EDIT: Also I'd note that this is pretty bad news. If they were so desperate to hold this emergency session to cushion any imminent derivatives unwinding, and yet nothing really came of it, what does that tell us about what is STILL imminent...

[Supercilious]

Re: Lehman, its NOT going well!

Bada bing, bada boooooom !!!!!


http://www.reuters.com/article/funds...46143920080915

NEW YORK (Reuters) - Senior unsecured debt of Lehman Brothers may receive 60 cents to 80 cents on the dollar in the event of a bankruptcy filing, research firm CreditSights said on Sunday.
Early quotes on such debt are trading even lower in the 32 cents to 35 cents range, CreditSights said. Lehman's banks and secured creditors could receive 100 cents on the dollar, according to analyst David Hendler, who co-authored the report.
Lehman Brother has about $613 billion in outstanding liabilities, including about $149 billion of corporate bonds, according to a May 31 company filing. CreditSights also sees zero recovery on subordinated debt and preferred stock.
CreditSights also said Lehman Brothers has about $60.2 billion in risky exposures as of the third quarter, including almost $50 billion of real estate exposure -- the bulk of which is tied to commercial real estate -- and $10.4 billion in acquisition finance exposure.

60-80c on the dollar ... they must be kidding ....

[santafe2]

Re: Lehman, its NOT going well!

So LEH is BK and BAC is taking over MER on top of CFC. Is the Fed going to cut rates to grease the skids? It's a good time to have a little cash.

[Honzajs119]

Re: Lehman, its NOT going well!

Who will be next? WaMu? AIG?

[Supercilious]

Re: Lehman, its NOT going well!

This is a very interesting piece:

http://blogs.wsj.com/deals/2008/09/1...?mod=fpa_blogs

Mean Street: If Lehman Liquidates, Wall Street Gets Set to Make a Killing


So this is the way it ends. Not with a bang but a whimper–Lehman Brothers looks headed into liquidation.
Apparently, you can put dozens of Wall Street’s finest into conference rooms at the Federal Reserve Bank of New York, but they can’t rewrite an immutable law of human nature: people act in their self-interest
And it is in everyone’s narrow interest–except for Lehman’s shareholders, debt holders and employees–to see Lehman in bankruptcy proceedings.
[...]
You can see Goldman Sachs CEO Lloyd Blankfein and Morgan Stanley CEO John Mack offer up a couple of billion dollars apiece as acts of noblesse oblige. They know a Lehman bankruptcy would be a big headache come Monday when the credit markets freeze up.
But “unselfish” acts have their limits. Goldman has billions of dollars dedicated to distressed debt situations just like this. It may very well run counter to the interests of Goldman investors and shareholders to subsidize any deal for Lehman.
This is where the Lehman death drama turns into farce. It isn’t a shortage of outside capital that is driving Lehman into bankruptcy. It is the bid-ask spread on its bad assets, or the difference between a buyer’s and seller’s views on price.
Sure, the $53 billion in assets are illiquid, but at some price there is a buyer. Are the assets worth 10 cents on the dollar or 50 cents on the dollar? Dick Fuld was afraid to find out because he knew that at 10 cents, Lehman likely was bankrupt anyway.


Still, there are tens of billions of dollars of Wall Street capital happy to bid for the assets. Goldman, private-equity firms like J.C. Flowers, Kohlberg Kravis Roberts, Carlyle Group, TPG or Blackstone Group, hedge funds, distressed-debt funds and sovereign-wealth funds all have capital. They are just waiting for the clearing prices on Lehman’s assets to get attractive.
[...]
If a Chapter 7 filing is made, Wall Street will move on. In offices and conference rooms not far from the New York Fed, bankers probably are already gathering to prepare for bids on assets they hope to pick up on the cheap in any potential Lehman liquidation.
In the coming weeks, Wall Street’s vultures will pick over Lehman’s still-warm body–and wait for one or two more victims to come their way.

What can I say? I was wrong. I was expecting they will do with Lehman what they did to Merill and to Merill what they did to Lehman.

It seems that Lehman's goodies were a much sweeter pot than Merill's.;)

[GRG55]

Re: Lehman, its NOT going well!

This is a very interesting piece:

http://blogs.wsj.com/deals/2008/09/1...?mod=fpa_blogs


What can I say? I was wrong. I was expecting they will do with Lehman what they did to Merill and to Merill what they did to Lehman.

It seems that Lehman's goodies were a much sweeter pot than Merill's.;)

"...It isn’t a shortage of outside capital that is driving Lehman into bankruptcy. It is the bid-ask spread on its bad assets, or the difference between a buyer’s and seller’s views on price.
Sure, the $53 billion in assets are illiquid, but at some price there is a buyer. Are the assets worth 10 cents on the dollar or 50 cents on the dollar? Dick Fuld was afraid to find out because he knew that at 10 cents, Lehman likely was bankrupt anyway..."

What happens if this statement is wrong. What if there are no bids for the riskiest of Lehman's assets. Who ends up with that stuff? Does this now drag on for an interminable period of time? Is that really that good for Wall Street?

Gonna be an interesting run into the elections and year end...