Bulls, Bears & Bucks #20: Lehman failliet, Merrill overgenomen

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Op zaterdag 13 september 2008 21:08 schreef SeLang het volgende:
Ik ben echt heel benieuwd wat eruit komt dit weekend. Gaat Paulson echt weigeren om nog meer belastinggeld in deze bodemloze put te gooien of laten ze nu eindelijk de vrije markt z'n werk doen.

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Als blijkt dat er geen bailouts meer plaatsvinden dan moeten bankaandelen verder omlaag.

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Op zaterdag 13 september 2008 21:10 schreef ItaloDancer het volgende:

[..]

Die twee opties komen op hetzelfde neer

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Op zaterdag 13 september 2008 21:08 schreef SeLang het volgende:
Als blijkt dat er geen bailouts meer plaatsvinden dan moeten bankaandelen verder omlaag.

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No Deal Reached Yet to Decide Lehman's Fate

The outlines of plans to determine the fate of Lehman Brothers Holdings Inc. emerged today even as it became increasingly clear that a clean sale of the entire firm to a big bank would be too difficult to execute.

A sense of optimism that a rescue could be arranged today dimmed as a growing sense of gloom descended on Wall Street. Executives from top banks in the U.S. and Europe huddled with federal regulators in an attempt to come up with plans to either buy pieces of Lehman or prepare for an orderly winding down of the firm in a manner that would minimize the collateral damage for the ailing global financial system.

After 6 p.m., the formal meeting ended for the day with no resolution, though some participants stayed behind to continue talking. "Senior representatives of major financial institutions reconvened on Saturday with U.S. officials at the New York Fed. Discussions are expected to continue tomorrow," said a spokeswoman for the Federal Reserve.

At about 8 p.m., New York Fed President Timothy Geithner was still at the bank's headquarters. Officials from the New York Fed and various banks were expected to continue working through the night.

Under one plan, either Barclays PLC or Bank of America Corp. would buy Lehman's "good assets", such as its equities business, people familiar with the matter say. Lehman's more toxic, real-estate assets would be ring-fenced into a "bad" bank that would contain about $85 billion in souring assets. Other Wall Street firms would try to inject some capital into the bad bank to keep it afloat for a period of time so that a flood of bad assets don't deluge the market, damaging the value of similar assets held by other banks and insurers. The banks are also looking for the government to somehow financially backstop the bad bank.

The problem, though, is getting enough banks to back that plan. While teams of bankers are working through structures, it's clear that only a handful of banks are in a position to provide enough funding. Many banks are inclined to preserve capital ahead of third-quarter and year-end cash preservation moves. Also, banks aren't keen to see a big rival such as Barclays or Bank of America walk away with valuable assets by only paying a pittance.

As of Saturday afternoon, Barclays, the U.K.'s third-largest bank in terms of market value, appeared to have more interest in pulling off a deal for Lehman's good assets. At about 3 p.m. on Saturday, Barclays President Robert E. Diamond Jr. was seen entering the New York Fed's employee entrance on Maiden Lane, carrying a briefcase.

Bank of America, an obvious buyer, appeared to be cooling toward a deal, people familiar with the matter. Of course, some of this could be the posturing that happens in any auction. Neither Barclays nor Bank of America wants to buy all of Lehman without some government assistance, and so far the government has been reluctant to do so.

Both Bank of America and Barclays remain fixated on the disposal of the bad real estate assets, and are less focused on evaluating Lehman's investment bank, said one person involved in the due diligence process. Things were moving so quickly Saturday that there was little time to do extensive employee interviewing that typically happens in company auctions. "It's all triage," said this person.

The real fear in the discussions, this person added, was that the fire-sale prices, or "marks" of Lehman's real estate book could set off a cascade of problems for other Wall Street firms. If those marks were made against other banks' portfolios, it could eventually force those firms to raise more capital, too. For firms' considering funding the bad bank, the calculation has thus become the price of that contribution against the price of a widescale markdown.

There could be further effects to such an event, with the banks calling in loans from hedge funds and other clients, in turn setting off more forced selling that further depresses asset and securities prices.

"Unless something is settled, it's going to be a bloodbath Monday," said this person.

In a meeting at the Federal Reserve Bank of New York in lower Manhattan, some participants also were discussing insurer American International Group Inc. and thrift-holding company Washington Mutual Inc. While those two financial firms aren't the focus of the emergency meeting, participants also are weighing the potential implications of their problems.

One person leaving the building said at least 100 people were gathered inside trying to settle the fate of Lehman, which has been staggered by its exposure to soured real-estate-related assets. By 5:15 pm, some Wall Street executives started to leave the New York Fed one at a time, getting in their cars inside a garage so they can't have their photos snapped.

Outside the Fed's downtown headquarters, a fleet of black towncars waited for bankers who were inside. At one point, the towncars blocked the narrow streets around the building, causing a traffic jam that had to be broken up by the Fed's uniformed guards. Meanwhile, bankers and Fed staffers milled around outside, smoking cigarettes and talking on their cell phones about subjects like counterparty risk.

"Everybody is hoping there will be a Wall Street solution to deal with Lehman's toxic assets," said one senior executive at a major bank. "It is a cheaper alternative than having everything unravel."

With it unclear whether the gap between the federal government and potential buyers can be bridged, a second group at the New York Fed is focusing on the possibility that there might be no alternative to liquidating Lehman and winding down its operations in an orderly fashion.

On Saturday afternoon, the credit-trading heads of major investment banks gathered at the meeting to discuss how to deal with their exposures to Lehman in the intertwined credit-default-swap market. The lack of a central clearinghouse in this market means that dealers, hedge funds and others are directly facing each other in insurance-like contracts that are tied to trillions of dollars in debt instruments.

Credit derivative traders at some firms were asked to come to work over the weekend to help quantify their exposures to Lehman and compile lists of outstanding contracts they have with the investment bank.

One person familiar with the matter said large dealers contemplated showing each other all of their credit default swap trades with Lehman. Disclosing their positions may enable dealers to find ways to offset their positions with each other wherever possible. Later in the day, some traders were told that Lehman -- with the help of Federal Reserve officials -- will try to figure out which of its counterparties have CDS trades that can be offset. Those counterparties would be informed of the offsetting positions, following which they can unwind their respective swaps with Lehman and concurrently enter into new swap contracts with each other. For example, if one dealer has bought a swap from Lehman and Lehman sold a similar swap to another bank, the two banks could agree to face each other directly.

Such moves could help prevent individual firms from scrambling to find new counterparties to rehedge their positions with when the markets reopen on Monday, potentially unleashing turmoil across the credit markets. They could also help facilitate an orderly wind-down of Lehman's derivative positions, if that becomes necessary. Still, sorting out the firm's CDS positions promises to be a difficult and time-consuming task, because many of the contracts have different terms and maturity dates.

It is not known how much in CDS contracts Lehman has. In a survey last year by Fitch Ratings, Lehman was listed among the 10 largest CDS counterparties by number of trades and the amount of debt to which the contracts were tied.

Wall Street traders poured into their offices Saturday for emergency meetings to consider the actions they would take if Lehman is forced into liquidation. They broke into teams to evaluate their positions and exposure to Lehman in everything from energy trades to equity derivatives to credit,

One trader said conditions in the credit default swap market and the short-term repo markets are more stable today than they were in March, when Bear Stearns nearly collapsed, but still, "if they go into liquidation," it is going to be a bad situation on Monday.

A disorderly unwind of Lehman's derivatives trades is only one worry. Another worry is that if Lehman collapses, its distressed assets -- such as commercial real estate -- could suddenly hit Wall Street for sale, forcing prices even lower and potentially forcing other dealers to mark down once again the value of their own holdings.

Lehman has hired law firm Weil, Gotshal & Manges LLP to prepare a potential bankruptcy filing, according to a person familiar with the situation. The New York-based Weil has a leading bankruptcy practice and advised Drexel Burnham Lambert on its 1990 bankruptcy filing.

In a Lehman bankruptcy, the firm's brokerage units would have to enter a Chapter 7 liquidation, in which a court-appointed trustee would take over, liquidate the firm's assets and get Lehman customers back their money. In general, securities that a customer holds at a brokerage firm are legally the investor's property and aren't exposed to the claims of the firm's creditors.

In trying to hold firm to their no-bailout stance even while pressing for a deal, federal officials could try to pit Bank of America and Barclays against each other. But that leverage can work only if both banks stay in the discussions.

Bank of America and Barclays know each other very well, having considered a merger several years ago. More recently, Bank of America agreed to pay $21 billion for ABN Amro Holding NV's LaSalle Bank of Chicago in 2007. That deal came at a time when Barclays was trying to buy ABN and fend off a European consortium bid. Bank of America's purchase was seen at the time as helping that Barclays bid, which ultimately failed.

At Barclays, a big question will be whether CEO John Varley and his No. 2, Mr. Diamond, both agree on buying all or part of Lehman. Mr. Diamond is eager to expand Barclays's U.S. investment bank operations. But the unit, called Barclays Capital, is also responsible for write-downs the bank has recorded.

After 5 p.m., bank executives began leaving the meeting, some getting into cars inside a garage where they couldn't be photographed. Those seen leaving included Merrill Lynch & Co. Chairman and Executive John Thain and Citigroup Inc. CEO Vikram Pandit. Bank of New York Mellon Corp. Chairman and CEO Robert Kelly declined to comment.

While some executives had left the Fed meeting, those of other firms, including three carfuls of Barclays executives, remained at the Fed office past 6 p.m.

At least 20 New York Fed staffers left from another exit. They refused to say if they were done for the night.

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Op zondag 14 september 2008 12:54 schreef Mr.J het volgende:
Niet zo negatief, 't zal allemaal wel op 't laatste moment goedkomen.

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En anders maar weer middelen maandag.

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Crisisberaad redding Lehman
14 09 08 - 13:58
Het is buigen of barsten voor Lehman Brothers. Crisisberaad over de toekomst van de zakenbank wordt zondag voortgezet. Mogelijk wordt Lehman in delen verkocht. Een faillissement kan volgende week een kettingreactie in gang zetten.

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Fed, Street Draft Deal To Buy Lehman's Bad Assets

A deal has been drafted to buy Lehman Brothers' bad assets and clear the way for an eventual sale of the troubled firm, CNBC has learned.

Under the terms of the proposal, which could still blow up, all the major Wall Street firms would pitch in $30 billion total to purchase Lehman's bad real estate assets and create what's knows as a "bad bank."

The proposal is being drafted Saturday night and will be discussed Sunday morning, according to sources close to CNBC. If Wall Street agrees on the terms, which would amount to around $3 billion per firm, it would clear the way for the sale of Lehman Brothers itself to one of several suitors, including Bank of America, Barclays Plc and HSBC.

Executives remained less than pleased with the proposal as they left the New York Federal Reserve around 6 p.m. to convene again Sunday morning. Contingency planning for no deal getting done, potential bankruptcy and defaults continues as Lehman continues its search for a buyer.

"Why should we give up capital so Barclays and Bank of America can buy a clean bank," said one Wall Street executive.

Despite the grumbling, those in the know expect the deal to get done Sunday, with Barclays in the lead to buy the rest of Lehman, including Neuberger. No price has been set just yet.

One Wall Street executive involved in the meetings put it this way: "I'm thinking logically; if they do nothing it's Armageddon. That means they do a deal. It will be announced at 6 p.m. (ET) Sunday."

Most people think the deal will come together sometime between 2 p.m. and 4 p.m. ET Sunday, though the structure is fluid, so the deal could change.

Barclays, along with Bank of America, HSBC and private equity firms have all expressed interest in purchasing Lehman Brothers, though far below the $70 share price that Lehman enjoyed earlier in the year.

Executives from these outfits have met with company officials who began to shop the firm after it became clear that a recent plan to add more capital wouldn't be enough to strengthen the firm, which holds around $40 billion in bad real estate assets on its books.

But with firms like Bank of America and Barclays refusing — at least so far — to budge on their position that they will only buy Lehman without the beaten down real estate assets, and the street balking on the government plan, which calls on the big firms to chip in a total of around $3 billion to purchase the Lehman assets, people with direct knowledge of the meeting say a deal may not get done.

Another problem: officials from the Federal Reserve and the Treasury were holding fast to their position that the government won't guarantee any of Lehman's bad assets, as they did with Bear Stearns, a move that allowed JP Morgan to purchased that troubled brokerage firm in March.

But the Fed's stance might soon soften — as might the position of Wall Street — because the consequences are so dire.

Without a deal, many market analysts predict Lehman will have to file for bankruptcy. Already, there is a near uprising at the firm. Top executives are saying they won't show up to work on Monday. It's unclear if other firms on the Street will continue to trade with Lehman and if Lehman can get loans from major financial players to fund its operations.

Making matters worse, if Lehman does file for bankruptcy, top Wall Street executives involved in the meetings with government officials say they fear another financial firm may be next. All eyes have been on Merrill Lynch, which, despite a recent plan to strengthen its balance sheet, still has exposure to bad assets.

Merrill, of course, is much more diversified firm than Lehman. It has the largest brokerage salesforce of any Wall Street firm, and a major investment in money management powerhouse, Blackrock.

Merrill recently raised billions of dollars in new capital, in part by selling its interest in Bloomberg LP, and it sold much of its bad debt to outside buyers in a complex plan that forced the firm to take a huge writedown.

But Merrill may not be out of the woods just yet. The firm still has some exposure to bad real estate, and short sellers may soon be targeting its stock, which has tanked in recent days, though top executives on Wall Street say Merrill could easily find a buyer such as a large bank because of the strength of its businesses.

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We Have Reached A Deal For Lehman, Sources Say
Posted by John Carney, Sep 14, 2008, 2:43am
We understand that a deal has been reached to divide Lehman Brothers into two entities, with a "bad bank" taking the toxic, real-estate assets amounting to around $85 billion. The deal will be financed without any government backing. Lehman chief executive Dick Fuld will resign.

Bank of America will take the lion's share of the good assets of Lehman, with Barclay's and Nomura playing a role as well. An international consortium of financial firms will inject capital for the deal, preventing Lehman's assets from flooding the market in a fire sale. Many US based firms have not played a large role, in part because they are facing their own financial challenges.

Dick Fuld's resignation was demanded by Bank of America, which played a brinkmanship role in negotiations, threating to let Asian markets open tomorrow without a deal in place, a person familiar with the matter says. Many believe that a Monday market opening without a resolution would effectively have been the end of Lehman Brothers and could have spread financial turbulence to other securities firms. (On a side note: apparently, Japanese markets will be closed Monday morning for a holiday.)

Fuld is said to have taken tonight's developments very badly. He does not believe that the situation is as desperate as others on Wall Street believe it is, and may be trying to negotiate an alternative deal, we're told.

Of course, the situation remains fluid and there is still a possibility that the deal reached tonight could fall apart. Many of the details remain to be worked out, although there is widespread agreement on the outline of this deal.

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Website says BofA will lead Lehman buyout
Sun Sep 14, 2008 9:13am EDT
NEW YORK (Reuters) - A financial website said a deal has been reached to split beleaguered Lehman Brothers into two entities, with a "bad bank" taking the toxic, real-estate assets amounting to around $85 billion and Bank of America taking the lion's share of the good assets.

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Op zondag 14 september 2008 15:58 schreef ItaloDancer het volgende:
85 miljard zonder government backing?? Dat geloof ik eerlijk gezegd gewoon echt niet. Daar moeten allerlei voordeeltjes bij zitten die de Amerikaanse belastingbetaler veel geld kosten maar die in kleine lettertjes op pagina 439 van de overeenkomst gedrukt zijn.

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UBS to take $5 bln 2nd-half write-down: report
Last update: 7:48 a.m. EDT Sept. 14, 2008

UBS will have to write down the value of certain investments by another $5 billion in the second half but was unlikely to raise more capital, a Swiss newspaper said, according to Reuters.
The Swiss investment-banking giant will need to take another $5 billion of write-downs on mortgage securities and other investments, Sonntags Zeitung reported. Reuters said that the paper didn't cite sources for its information and that UBS declined comment on the report.
As of the middle of last month, UBS had written down $42 billion since the start of the credit crisis.

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Op zondag 14 september 2008 16:22 schreef ItaloDancer het volgende:
Bloomberg en Dow Jones (Wall Street Journal / MarketWatch) zitten er bovenop en melden Barclays dus als voornaamste kandidaat om Lehman (minus afval) over te nemen... en dat de deal nog zeker niet rond is. Laat staan dat we weten wat de overheid / Fed precies inbrengen.
Wat niet per se wil zeggen dat zij betere bronnen hebben natuurlijk, maar deze deal geloof ik niet...

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Fed, Street Draft Deal To Buy Lehman's Bad Assets
LEHMAN AIG, MORGAN STANLEY, JPMORGAN, PAULSON
By Charlie GasparinoOn-Air Editor
CNBC.com
| 13 Sep 2008 | 06:58 PM ET
A deal has been drafted to buy Lehman Brothers' bad assets and clear the way for an eventual sale of the troubled firm, CNBC has learned.

Under the terms of the proposal, which could still blow up, all the major Wall Street firms would pitch in $30 billion total to purchase Lehman's bad real estate assets and create what's knows as a "bad bank."

The proposal is being drafted Saturday night and will be discussed Sunday morning, according to sources close to CNBC. If Wall Street agrees on the terms, which would amount to around $3 billion per firm, it would clear the way for the sale of Lehman Brothers itself to one of several suitors, including Bank of America, Barclays Plc and HSBC.

Executives remained less than pleased with the proposal as they left the New York Federal Reserve around 6 p.m. to convene again Sunday morning. Contingency planning for no deal getting done, potential bankruptcy and defaults continues as Lehman continues its search for a buyer.

"Why should we give up capital so Barclays and Bank of America can buy a clean bank," said one Wall Street executive.

Despite the grumbling, those in the know expect the deal to get done Sunday, with Barclays in the lead to buy the rest of Lehman, including Neuberger. No price has been set just yet.

One Wall Street executive involved in the meetings put it this way: "I'm thinking logically; if they do nothing it's Armageddon. That means they do a deal. It will be announced at 6 p.m. (ET) Sunday."

Most people think the deal will come together sometime between 2 p.m. and 4 p.m. ET Sunday, though the structure is fluid, so the deal could change.

Barclays, along with Bank of America, HSBC and private equity firms have all expressed interest in purchasing Lehman Brothers, though far below the $70 share price that Lehman enjoyed earlier in the year.

Executives from these outfits have met with company officials who began to shop the firm after it became clear that a recent plan to add more capital wouldn't be enough to strengthen the firm, which holds around $40 billion in bad real estate assets on its books.

But with firms like Bank of America and Barclays refusing — at least so far — to budge on their position that they will only buy Lehman without the beaten down real estate assets, and the street balking on the government plan, which calls on the big firms to chip in a total of around $3 billion to purchase the Lehman assets, people with direct knowledge of the meeting say a deal may not get done.

Cramer: What Banks You Should BuyAre There Any Good Financial Stocks?

Another problem: officials from the Federal Reserve and the Treasury were holding fast to their position that the government won't guarantee any of Lehman's bad assets, as they did with Bear Stearns, a move that allowed JP Morgan to purchased that troubled brokerage firm in March.

But the Fed's stance might soon soften — as might the position of Wall Street — because the consequences are so dire.

Without a deal, many market analysts predict Lehman will have to file for bankruptcy. Already, there is a near uprising at the firm. Top executives are saying they won't show up to work on Monday. It's unclear if other firms on the Street will continue to trade with Lehman and if Lehman can get loans from major financial players to fund its operations.

Making matters worse, if Lehman does file for bankruptcy, top Wall Street executives involved in the meetings with government officials say they fear another financial firm may be next. All eyes have been on Merrill Lynch, which, despite a recent plan to strengthen its balance sheet, still has exposure to bad assets.

Merrill, of course, is much more diversified firm than Lehman. It has the largest brokerage salesforce of any Wall Street firm, and a major investment in money management powerhouse, Blackrock.

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Op zondag 14 september 2008 17:32 schreef ItaloDancer het volgende:
Ik ga ervan uit dat met een beetje water bij de wijn van zowel de overheid als de banken toch voor de opening van de Aziatische beurzen een overeenkomst zal worden bereikt.

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Battered insurer AIG’s $20bn asset sale
Dominic Rushe in New York
AIG, the world’s largest insurer, is planning a $20 billion (£11 billion) asset sell-off as it fights to correct a record slump in its share price and braces for the impact of Hurricane Ike.

Details of the plans could come as early as tomorrow. On Friday the insurer appointed investment bank JP Morgan to work on a rescue plan after its shares fell a record 31% in a single day.

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The chicken game over Lehman
After propping up the financial system for more than a year, the government seems to be drawing the line - and for good reason.


NEW YORK (Fortune) -- A crew of top federal officials has spent the past year racing from one fire to the next in a harried effort to smother financial blazes that keep inflaming the markets and threatening the rest of the economy.

But after disgorging billions in taxpayer funds and effectively taking over three big companies, the emergency response team has apparently changed its tactics when it comes to Lehman Brothers (LEH, Fortune 500).

Just a week after they effectively nationalized mortgage giants Fannie Mae (FNM, Fortune 500) and Freddie Mac (FRE, Fortune 500), and six months after they financed a hasty takeover of Bear Stearns, the Federal Reserve and Treasury are delivering Wall Street a different message: you'll have to learn to save yourselves.

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Op zondag 14 september 2008 19:06 schreef HansAEX het volgende:
NYT NEWS ALERT: Barclays Says It Has Walked Away From Talks With Lehman

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Bank of the Year for Credit Derivatives: Lehman Brothers
02-10-2006

Lehman Brothers’ pioneering spirit has put the firm at the forefront of credit derivatives product design and market development. By continuing to foster that spirit, it has secured this year’s award.

In the past year, Lehman developed the first ever rated synthetic equity structure that enables traditional investors who need a rating to access cheap equity.

The structure takes advantage of the relative value of junior parts of the capital structure while providing protection to return against defaults. To date, $2bn of risk has been placed and the new issue pipeline is strong.

“With these kinds of products, we have made it easier for more traditional types of investors, such as money managers and insurance companies, to invest in the structured area for the first time,” says Lisa Watkinson, global head of structured credit business development at Lehman Brothers.

Lehman also pioneered the development of preferred credit default swaps, in which it has traded more than $8bn across more than 60 counterparties, and on which it has based a series of innovations. In September 2005, it introduced a new layer of the capital structure to the credit derivative index market with the launch of PDX, an index referenced to 40 issuers of preferred securities; it has broadened the investor base in the hybrid markets and created a homogenous and liquid pricing/hedging benchmark.

“The cornerstone of our business is the research platform,” says Ms Watkinson. “This enables Lehman Brothers to be prudent and conservative risk managers but innovative in our structuring. And this enables us to tap into new investor bases.”

The judges were particularly impressed with the way Lehman’s investment bankers work with clients to structure solutions. One client praised a complex and highly innovative transaction that Lehman undertook for his firm, in which it simultaneously had to raise capital efficient financing, structure a synthetic collateralised debt obligation (CDO) and raise third-party assets under management.

In the coming year, Ms Watkinson believes that the continued application of CDO technology to synthetic assets will help to drive the market. “Loan-only derivatives will be a huge growth area for Lehman Brothers and the market,” she says. “Such products bring in new investors by allowing us to tap into an asset class that was previously not liquid enough.”

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Op zondag 14 september 2008 19:22 schreef HansAEX het volgende:
Of die man ook een parachutte meekrijgt moet nog blijken vanavond ;-)

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Op zondag 14 september 2008 19:59 schreef Billary het volgende:
Interessante dag morgen..

US heading for Depression?

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Sept. 14 (Bloomberg) -- A group of banks and brokers began preparing for a potential Lehman Brothers Holdings Inc. bankruptcy filing today, addressing outstanding trades that the company has in over-the-counter derivatives markets.

Financial firms have started ``netting'' Lehman trades on credit, equity, interest-rate, foreign exchange, and commodity derivatives, according to a statement from the International Swaps and Derivatives Association e-mailed to Bloomberg News.

``ISDA confirms a netting trading session will take place between 2 p.m. and 4 p.m. New York time for over-the-counter derivatives,'' the ISDA said. ``Trades are contingent on a bankruptcy filing at or before 11:59 p.m. New York time, Sunday, Sept. 14, 2008. If there is no filing, the trades cease to exist.''

The announcement came after Barclays Plc, the U.K.'s third- biggest bank, said it abandoned talks to buy Lehman, contending it couldn't obtain guarantees to protect against potential losses at the U.S. securities firm.

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FACTBOX: Possible outcomes for Lehman Brothers

The Federal Reserve Bank of New York, the U.S. Treasury, the Securities and Exchange Commission and a group of major banks were meeting on Sunday to determine the fate of Lehman Brothers Holdings Inc.

Lehman, once the fourth-largest U.S. investment bank by market capitalization, has lost the confidence of investors as its balance sheet sags under the weight of more than $46 billion of mortgage-backed and asset-backed securities.

Below are the options being considered for Lehman, according to people briefed on the matter and a restructuring expert:

A buyer steps in, with no government support. This is the preferred option for the Federal Reserve and the Treasury, which fear that supporting too many wobbly investment banks will encourage excessive risk taking.

Other major U.S. banks would likely agree to help finance Lehman's bad assets under this scenario. But working out who would finance how much would be difficult. Weaker banks have little capital to spare, while stronger banks would resist being penalized for playing the credit crisis well.

The lack of government support for Lehman could cause a painful and fast reassessment of credit risk in the U.S. financial system. Many banks and investors have been trading normally with investment banks, under the expectation that the U.S. government would support any that went out of business. If the government shows it is unwilling to provide support, other dealers could find themselves with little business, and perhaps even on the brink of bankruptcy.

A buyer steps in, with government support. The preferred option for major U.S. banks and prospective buyers, which believe they should not have to pay for Lehman's sins, but that Lehman's demise may create systemic risk.

In this scenario, the government would likely support Lehman's bad assets, much as it did when JPMorgan Chase agreed to buy Bear Stearns in March. In that deal, the government agreed to guarantee $29 billion of assets.

But the government would add to the risk on its balance sheet, after bailing out Fannie Mae and Freddie Mac, and supporting JPMorgan's purchase of Bear Stearns. The government's mounting exposure to bad assets may erode investor confidence in Treasuries and the dollar.

Nothing is resolved by Monday. Most major Asian markets are closed, but European and U.S. markets will likely panic. Dealers will likely try to rapidly unwind their positions with Lehman across many products, and accessing short-term financing through the repo markets will be difficult.

Lehman reported $42 billion of liquidity at its holding company as of the end of August, and can pledge additional assets to the Federal Reserve, but it is difficult for any financial company to survive if investors lack confidence in its ability to do so.

Lehman files for bankruptcy: When this would happen is not clear, but in the absence of a rescue plan, the 158-year old firm would likely have no other choice. Bankruptcy would allow the orderly sale of Lehman's assets. Lehman would want the process of preparing for bankruptcy and getting through the process to take as little time as possible, because the longer it takes, the lower the value of its franchise.

Going into the bankruptcy process with an already-developed plan for liquidating assets would make the most sense as it would ensure the company is in bankruptcy for as little time as possible.

There are two options that involve filing for bankruptcy with a plan in place: a "prepackaged bankruptcy," where creditors and equity holders have already approved the plan, and a "prenegotiated bankruptcy," where leading stakeholders have negotiated a plan but have not received approvals from the requisite number of creditors and equityholders.

Of those options, a prenegotiated bankruptcy may be preferable, because it requires less preparation time before filing for bankruptcy.

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Bank of America, Merrill Lynch In Merger Talks

Bank of America and Merrill Lynch & Co. Inc. are in merger discussions, according to people familiar with the matter.

The talks come amid a Wall Street scramble to sort out a potential liquidation of Lehman Brothers Holdings Inc.

Bank of America had considered buying Lehman, but when those talks failed to result in a deal, BofA turned its attention to Merrill, which is considered a better fit for the bank.

Much remains uncertain and conditions were fluid.

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Op zondag 14 september 2008 22:27 schreef ItaloDancer het volgende:
En het laatste nieuws op NOS TT is "Open Monumentendag druk bezocht", niets over dit alles