One of the most interesting developments in the Lehman debacle must be the abrupt departure and the return (which followed hard upon) of Barclays as a Lehman suitor.
Hazarding a guess, one might think that Barclays was trying to stare down Paulson, pressing for federal backing of the potential toxic waste Barclays would have to take on in a Lehman purchase. After all, Jamie got the government to blink, why shouldn't our friends from across the pond? That didn't work so well. Bailing out a major counter-party and prime broker (and coping with the moral hazard problems that brings) was one thing, supporting a foreign buyer was a no-go and I suspect not a small number of risk arb managers who figured that out on Friday did fairly well today.
Still, The Wall Street Journal points out that Paulson was in no mood to nursemaid another transaction no matter who the buyer. Our own John Carney makes the case for a tempestuous and unpredictable Paulson. And for Barclays' part, well, they look a bit silly now that their bluff bombed. But then, it tends to illuminate the desperation Lehman must feel that they seem to be ignoring all the bluster and continue to act as if nothing at all has happened now that the Brits are back bidding.
John Mack escapes with my favorite quote from the morass that is Lehman's disposition: "If we're going to do this deal, where does it end?"
Posted by guest , Sep 15, 2008 1:31PM
Ch. 11 makes it easier to buy the good bits and leave the toxic waste on 7th Ave.
Posted by guest , Sep 15, 2008 1:36PM
WSJ: One person in the Fed meetings Saturday night described them as "the world's biggest game of poker."
Posted by guest , Sep 15, 2008 1:36PM
wonder who gets 745? Its a hell of a nice building. Maybe Morgan will buy it back on the cheap.
Posted by guest , Sep 15, 2008 1:41PM
The M&M Store should take it. Maybe they'll come out with more colors.
Posted by guest , Sep 15, 2008 1:47PM
Barclays + Lehman = Barley.
Posted by guest , Sep 15, 2008 1:48PM
3 I assume its leased, probably at below market rates, in which case the lease will be a corporate asset, to be disposed of by the bankruptcy trustee
Posted by guest , Sep 15, 2008 1:49PM
5 Barclay + Lehman + hops = beer
Posted by guest , Sep 15, 2008 1:49PM
#5 Barman
Posted by guest , Sep 15, 2008 1:52PM
bofa will drink your milkshake
Posted by guest , Sep 15, 2008 1:52PM
I'm hearing GS might make a play for MER. Maybe up the offer.
Posted by guest , Sep 15, 2008 1:53PM
AIG + Lehman + Merrill = Lots of beer tonight.
Posted by guest , Sep 15, 2008 1:54PM
@6 Lehman bought 745 from Morgan Stanley after 9/11 destroyed their downtown HQ.
Posted by guest , Sep 15, 2008 1:54PM
@6 I believe they bought it from MS shortly after 9/11 for somewhere near 700M and is now worth 1.3B
Posted by guest , Sep 15, 2008 1:57PM
to john mack: it all ends when we get asked by europe to defend it from russia, spurring heavy industrial production and bringing america out of the financial/economic recession. sound familiar?
Posted by guest , Sep 15, 2008 1:59PM
be honest, who's "killing it, baby!" today?
-retail
Posted by redpandot , Sep 15, 2008 1:59PM
I knew that little war in Gergia would come in handy...
Posted by guest , Sep 15, 2008 2:00PM
Well, hang on a minute. This isn't just about Paulson saying no. The FSA (our little SEC) apparently also objected to the deal on the grounds that Barclays' Tier 1 ratio ain't that great. Moreover, British institutions can't just jump into deals like this - to actually sign up a deal of this scale (or any 'Class 1' transaction) you need an EGM. Takes a while and means that, even should Varley and Diamond want to takeover LEH, they can't actually say they will for a few weeks.
Lots on this over on Alphaville.
Wharfer
Posted by guest , Sep 15, 2008 2:13PM
@ 6 They bought it outright for, at the time, a good price given MS wanted to diversify its headcount out of the city in the wake of 9/11. I always regretted we spent so much on the electricity to run that stupid scrolling billboard.
Posted by guest , Sep 15, 2008 2:15PM
I would say it makes Barclays look very clever rather than silly. Buy the good bits at a knockdown price leaving the rubbish now that chapter 11 is in place
Posted by guest , Sep 15, 2008 2:31PM
Barclay's will be worse off if they buy pieces of Lehman out of bankruptcy: Lehman is now a wasting asset, and clients are fleeing. Barclay's could have stanched the bleed if they had signed up over the weekend.
Posted by guest , Sep 15, 2008 2:35PM
Barclays will only be worse off if the price hasn't changed - everything has a price, even a depreciating asset - ask John Thaine
Posted by guest , Sep 15, 2008 2:45PM
Did Lehman employees have to provide their own laptops? - I can think of no other reason why every picture I have seen has an employee walking out of the building with a box of personal belongings and a laptop under their arm....one guy also appeared to have loaned Lehman a painting which he now thought would be better at home......with strict budgets like that I can't understand how they could possibly have gone under.
Posted by guest , Sep 15, 2008 2:47PM
...somebody's reading my blog, I see.
someone said yesterday barclays is tight on cash. for whatever that's worth.
anyway, i thought bberg reported that their cds are among the lowest of the banks. but I'm not sure i trust those bberg reporters.
last night they said the S&P was down in New York trading. details, details.
Posted by guest , Sep 15, 2008 3:12PM
Merrill (MER) and Bank of America (BAC) To Fire 20,000+ (MER, BAC)
Sep 15, 08 9:46 AM
Merrill Lynch (MER) and Bank of America (BAC) say merger savings will total $7 billion. We estimate that this means at least 20,000 people will be fired.
Our Assumptions:
* $5 billion of the $7 billion is compensation costs (the rest is real estate)
* $250,000 average compensation per employee
Add in the Lehman axings too.
Posted by guest , Sep 15, 2008 3:43PM
@21-- the price may be declining, but the best assets (both customers and employees) are ALREADY out the door, so Lehman is no longer a great opportunity for anyone
Posted by guest , Sep 15, 2008 11:32PM
25. I disagree.
Employees have a free option, but most will want to stay with the firm. Key teams are still intact -- mgmt is doing everything it can to preserve the value of the firm.