Well, that didn't take long. As soon as we floated the rumor about an emergency rate cut, we heard from a "source familiar with the matter" who tells us that the New York Federal Reserve and Treasury are scrambling to find a buyer for Lehman Brothers. Our source says that one possible solution may be to have regulators wave restrictions that have prevented private equity buyers from buying the troubled investment bank. Officials at the Fed and Treasury are looking into whether they may have the authority to grant waivers.
One plan under consideration is to bring in a foreign bank to make the purchase, with additional capital coming from private equity buyers. The situation was described as "fluid to the point of chaos, category 4 hurricane" by the source. Both the Fed and Treasury officials agree that there should not be another Fed backstop to Lehman obligations, one of tools employed to get JP Morgan Chase to buy Bear Stearns.
Update: Andrew Ross Sorkin just also said on CNBC that the Fed is actively helping find a solution to the crisis at Lehman.
Update II: Bloomberg reporting that Lehman is in negotiations with buyers. "Bankers from other firms are reviewing Lehman's books today, people with knowledge of the situation said, declining to identify the potential acquirers," Bloomberg says.
Posted by guest , Sep 11, 2008 1:20PM
Black Thursday 2 Electric Boogaloo...I Bet Sarah Palin would just put Lehman on ebay
Posted by guest , Sep 11, 2008 1:21PM
@ what price???
Posted by guest , Sep 11, 2008 1:23PM
I'm gonna guess here and say less than a jar of mayo
Posted by Anal_yst , Sep 11, 2008 1:24PM
wait wait, other potential buyers are just NOW checking out lehman's books?
wtf?
Posted by guest , Sep 11, 2008 1:24PM
price will be 1 TBSP of Mayo & + 1 sqr inch of shamwow per share
Posted by guest , Sep 11, 2008 1:25PM
If BS went out @ 10...
Posted by guest , Sep 11, 2008 1:25PM
does that include S&H?
Posted by guest , Sep 11, 2008 1:26PM
LEH needs to merge with Sham Wow in order to survive.
Posted by guest , Sep 11, 2008 1:28PM
that's category 4
Posted by guest , Sep 11, 2008 1:28PM
@8
Sham wow IS Lehman.
Every time someone says 'Sham-wow', another employee gets cut a Lehman.
See, between your post and mine, three Lehman people got let go!
Posted by guest , Sep 11, 2008 1:28PM
name brand mayo or store brand
Posted by guest , Sep 11, 2008 1:29PM
I think the Fed should step up and buy it. Then they would have not only 80% of mortgage originations but the machine needed to churn out structure paper to offload the mortgages. Perfect marriage.
I'd then suggest they talk BofA out of countrywide, they would have a fully integrated platform.
Posted by guest , Sep 11, 2008 1:30PM
No Opinion
Posted by guest , Sep 11, 2008 1:30PM
@11 Hellmann's Light. "Bring out the best."
Posted by guest , Sep 11, 2008 1:30PM
@11
That's probably the sticking point in the negotiations. Treasury prefers store brand, Fuld prefers Hellmans.
Posted by guest , Sep 11, 2008 1:32PM
@12 Yeah, and where would the Fed get the dough to do so?
Unless they go with nationalizing Lehman, of course. Which is a pretty wild thought.
Posted by guest , Sep 11, 2008 1:32PM
"wave restrictions that have prevented private equity buyers from buying "
yes, they are going to lift the source of strength doctrine. these times have really brought out the worst in the NY fed/paulson
Posted by guest , Sep 11, 2008 1:33PM
Fuld is missing Erin Callan and her Miracle Whip, it's the only thing that made those long nights in the office bearable.
Posted by guest , Sep 11, 2008 1:34PM
@12
and turn their headquarters into section 8 housing. I like it.
Posted by guest , Sep 11, 2008 1:34PM
The Govt can nationalize the entire economy. The financials, the airlines and the automakers. Pretty soon we will be calling each other comrade.
Posted by guest , Sep 11, 2008 1:35PM
Say, anybody else notice that Hellmann is a near anagram to Lehman?
Coincidence? I think NOT!!
Posted by guest , Sep 11, 2008 1:35PM
Vince Offer is negotiating on behalf of Lehman. This is going to get very interesting, VERY SOON. THESE DEALS WILL NOT LAST.
Posted by guest , Sep 11, 2008 1:36PM
Threw a $5 bill on a trader's desk this morning and told him to buy me a share of Lehman. He laughed and said he would make sure to get me change.
Posted by guest , Sep 11, 2008 1:37PM
Ron Popeil
Posted by guest , Sep 11, 2008 1:38PM
@23 - who carries around $5 bills?
Posted by guest , Sep 11, 2008 1:39PM
You following me Treasury Man?
Posted by guest , Sep 11, 2008 1:42PM
Heard that LEH is being shopped to the National Coalition of Hot Dog Vendors. Might be a two pronged deal with Shake Shack buying in for a minority stake.
Posted by guest , Sep 11, 2008 1:42PM
The Govt can nationalize the entire economy. The financials, the airlines and the automakers. Pretty soon we will be calling each other comrade.
Posted by Riskybusiness , Sep 11, 2008 1:43PM
@19 - With the massive decline in Lehman employees net worth they will need the new Section 8 housing. This could cause a catastophe of biblical proportions - Lehman MD's selling their S500's in favor of 15 yr old Fords and brownbagging it to their new jobs as janitors.
Posted by guest , Sep 11, 2008 1:44PM
23 - So how many minutes later did you go back and ask for your $5 back so you could get your food-cart lunch?
Posted by guest , Sep 11, 2008 1:46PM
@30 I bring my lunch in a little cooler.
Posted by guest , Sep 11, 2008 1:47PM
Dick Fuld waited too long, what a maroon. He was just like J. Cayne, swaggering about how his firm was worth north of $100; blah blah until it was worth $2. Dick decided to act as if he was sitting on a pile of gold, when it was really just - well, you all know what it's a pile of.
Instead of a "temporarily bruised giant" that could sell at a discount, Dick insisted it was just a flesh wound and that he had the upper hand.
Now it's the Fed calling the shots. Dick - you overplayed your hand. Go make a fourth for bridge with Jimmy C, Chucky P, and Stanny O.
You make me sick - people losing their jobs, a fabled firm name about to go through the mud - because you refused to see the truth. Why not see about using some of your millions to help out some of your guys in the back office and mailroom, because there are just not jobs out there and you can weep in the sanctity of one of your homes.
Posted by guest , Sep 11, 2008 1:51PM
Every time lehman goes down 10% an Angel (er, options trader) gets his wings
Posted by guest , Sep 11, 2008 1:54PM
@27 - heard Shake Shack did due dili but wasn't comfortable with the assets and walked. They felt more comfortable with what goes into hotdogs than the assets on Leh's balance sheet.
Posted by guest , Sep 11, 2008 1:56PM
DAVID EINHORN JUST BLEW A LOAD IN ERIN CALLAN'S FACE.
Posted by Debter , Sep 11, 2008 2:00PM
I'm hearing the private equity guys stepped back b/c the guys who run Neuberger, aside from owing a bunch of stock, do not have a retention package past next year and are looking for 400mm to go along with any deal. Anyone hear something similar?
Posted by guest , Sep 11, 2008 2:00PM
we heard from a "source familiar with the matter" who tells us that the New York Federal Reserve and Treasury are scrambling to find a buyer for Lehman Brothers.
Bullshit. Gawd, you geniuses will believe anything.
The symbol ain't a bull for nothing. Herd thinkers, all.
Posted by guest , Sep 11, 2008 2:02PM
#36 - they want to buy it out themselves. Don't know why they can't cut a deal where they own a chunk and the acquiror gets the majority.
Posted by guest , Sep 11, 2008 2:02PM
Neuberger's people's contracts end middle of October.
Posted by guest , Sep 11, 2008 2:06PM
who cares about the lehman death watch, let's talk about the dennis kneale death watch. how long does he live after calling gasparino "sweetie" @2:46 of this clip:
http://www.cnbc.com/id/15840232?video=852151202&play=1
Posted by guest , Sep 11, 2008 2:12PM
there is a reason so many prospects have walked from this deal. There is also a reason why LEH wouldn't come out with full earnings a week early.
without another fed bailout to assume the risk, I'm betting nobody touches it
Posted by guest , Sep 11, 2008 2:17PM
So how savagely are the LEH employees getting fucked by this? I mean in terms of the way the LEH restricted-stock unit scheme works for annual comp? I thought they have to take some percentage of their comp in RSUs that vest over N years, right?
Posted by guest , Sep 11, 2008 2:22PM
@ 42, oh, perhaps about as savagely as they ***ked their clients, perhaps?
Posted by guest , Sep 11, 2008 2:24PM
The Fed only acts on Fridays after 4 pm. If LEH can survive until then, we're all OK.
Posted by guest , Sep 11, 2008 2:25PM
@32 Thanks for telling it like it is for the everyday worker. Not everyone who works there is a big man-thing on the trading floor.
@42 Pretty hard. That is correct and the %age of RSUs as comp had been increasing last couple of years.
Posted by guest , Sep 11, 2008 2:26PM
i have herd that LEH MDs have a 5yr cliff
Posted by guest , Sep 11, 2008 2:26PM
@42: I've heard before that at least at the MD level that about 2/3 of bonus is in 5 year restricted stock.
Posted by guest , Sep 11, 2008 2:32PM
42 Yeah, honestly, why is it that whenever comp is structured as a two way street (that is, people will be rewarded when things are going well but should expect to be penalized when they're not) everyone starts whining like a baby. Its so lame, esp coming from people that brag about embracing risk and the wisdom of survival of the fittest.
Posted by guest , Sep 11, 2008 2:37PM
@46,47,45 - Thanks for the info.
Man, I'm glad I pulled up stakes and left the street when I did (last year). I'm enjoying watching this from a distance, but I'm sure the reality is pretty grim for a lot of folks out there. On the other hand, a lot of the people I met from LEH were pretty arrogant assholes so I guess you reap what you sow to some degree...
Posted by bank_teller , Sep 11, 2008 2:45PM
when does einhorny cover?
Posted by guest , Sep 11, 2008 2:46PM
@48: Yeah, I feel bad for people who just end up being collateral damage in these things, but, after the .com bust I don't have a lot of sympathy for people who put their eggs in one basket. You have to prepare for the worst, whether you're making $50K a year or $1M. I knew a guy at Bear, who came to work there from some other firm, converted all of his stock from the previous job into BSC and then lost it all the next week - $1M+ down the drain, he was totally wiped out. I just don't get it - anyone who works in this industry knows it's built on platform of lies, manipulation, and greed. Not that there's anything wrong with that, but if you ever forget that you're walking on thin ice, you're bound to get screwed.
Posted by guest , Sep 11, 2008 2:48PM
Guess lot of FIG bankers are pulling all nighters crunching Broker dealer comps.....
Must suck when its for you own firm
Posted by guest , Sep 11, 2008 2:51PM
@51- Well said..
Posted by bank_teller , Sep 11, 2008 3:01PM
news flash -- apparently lehman employees may look into other jobs!
http://www.reuters.com/article/marketsNews/idINN1112974120080911?rpc=44
Posted by guest , Sep 11, 2008 3:24PM
@54: Reuter's news service is renowned for their keen insights on the state of the financial industry. This article just goes to show how their team of talented, hard-hitting reporters can leverage their sophisticated networks of sources, cultivated over years of covering this industry, to bring you the raw stories you won't find elsewhere. I'm upgrading TRI from neutral to market-outperform based on this latest development.