Good morning. Here's the latest we have on Lehman Brothers. Top Wall Street executives and Washington officials returned to meetings at the New York Federal Reserve this morning.
Barclays has emerged a the leading contender for a takeover of Lehman, the Wall Street Journal reports. The role of government support for a sale of Lehman remains a sticking point, with both Barclays and Bank of America insisting that the government commit to backing the deal with financing while officials from the Treasury Department remain adamant against that backing.
The Financial Times sees a different group as the leader:
Bank of America is seen as the leading candidate to buy Lehman. It is considering a possible joint takeover bid with JC Flowers , the financial investor, and China Investment Corporation, the Chinese sovereign wealth fund. UK bank Barclays is also interested. The three could combine, with the BoA consortium buying Lehman's investment bank and Barclays taking its asset management arm, which includes Neuberger Berman.
At CNBC, Steve Liesman provides some details on what the Fed's officials in Washington and New York have been up to.
By mid-morning, Federal Reserve Chairman Ben Bernanke was said to have been involved in several conversations by phone from Washington with officials meeting at the New York Federal Reserve. In addition, Bernanke was said to have made several calls already to foreign central bankers who are monitoring the proceedings carefully.New York Federal Reserve President Tim Geithner and Treasury Secretary Hank Paulson were already at the New York Fed by the time executives from top Wall Street firms began to arrive.
For some purely atmospheric takes on the scene yesterday at the Fed you can read Deal Journa's coverage of casual dress and sandwich carts or check out some of the Associate Press photos DealBook included it is write-up.
You can contact DealBreaker by email at tips@dealbreaker.com and follow us on Twitter, which we'll use for mini-updates about the situation. You can also reach us by calling or texting our special Lehman tips hotline: 646-526-FEAR. (A bit dramatic, we know. Just wanted something you'd remember.)
Posted by guest , Sep 14, 2008 11:19AM
same old same old.
Posted by guest , Sep 14, 2008 11:27AM
Too long didn't read
Posted by guest , Sep 14, 2008 11:28AM
Too long, didn't read
Posted by guest , Sep 14, 2008 11:28AM
I for one welcome our new Citigroup overlords.
Posted by guest , Sep 14, 2008 11:29AM
Carney -- Thank you for the update.
Posted by guest , Sep 14, 2008 11:32AM
Dealbreaker needs to merge with Perezhilton to survive
Posted by guest , Sep 14, 2008 11:32AM
@4
Citigroup is not one of our overlords. Our overlord don't speak english. They are China, Japan, Russia, Saudi Arabia...
Posted by guest , Sep 14, 2008 11:38AM
http://cgi.ebay.com/ws/eBayISAPI.dll?ViewItem&item=320299216040
Posted by guest , Sep 14, 2008 11:49AM
lol @4
Posted by guest , Sep 14, 2008 11:55AM
what i don't understand is who's putting the screws on leh? they have all the liquidity they need from the fed i would suppose. yes they are insolvent but so is everybody else. why would moody's pick on them? that's what a good reporter would find out.
Posted by guest , Sep 14, 2008 12:01PM
WWW.LEHMANBAILOUT.COM AVAILABLE FOR THE TAKING...
http://cgi.ebay.com/ws/eBayISAPI.dll?ViewItem&item=320299216040
Posted by guest , Sep 14, 2008 12:07PM
Dont forget the role of UK regulators in any BCS deal. they are very short sighted
Posted by beentheredonethat , Sep 14, 2008 12:07PM
CNBC is saying talks are focusing on dealing with the fact there is no deal and what to do when the markets open....
Posted by guest , Sep 14, 2008 12:21PM
@ 13
Maybe they are studying the way Pakistain government handled thier market meltdown.
If the markets open without a deal do you think there is anyway to avoid a complete shit show?
ps - have you slept at all in the past 36 hours?
Posted by guest , Sep 14, 2008 12:23PM
@ 11. UNREAL.
Posted by guest , Sep 14, 2008 12:44PM
Oh please, the guy who posted that #11 is the guy who's selling it on Ebay...
Besides - you'll pay him thru paypal and with financial market meltdown your money, and his is worth nothing.
Posted by guest , Sep 14, 2008 12:52PM
@11: Can I pay with LEH RSUs? Either that or I have $11billion in CDOs that should cover it once marked to market.
It's not worth $500 without BankofBrothers.com.
Posted by guest , Sep 14, 2008 12:56PM
Does anyone know the leverage ratio of LEH and the other banks?
Posted by guest , Sep 14, 2008 1:00PM
30 to 1
Posted by guest , Sep 14, 2008 1:04PM
When's someone gonna call the IMF?
Posted by guest , Sep 14, 2008 1:05PM
@17: I agree, you gotta hedge the bet that Barclay's is the "lucky" buyer
$$$
Posted by guest , Sep 14, 2008 1:06PM
Barclays pulls out - 11:57 headline on Bberg
Posted by guest , Sep 14, 2008 1:07PM
We need the World Bank to bail out Lehman, just like other third world countries.
Posted by guest , Sep 14, 2008 1:15PM
@ 22
can't find it
Posted by guest , Sep 14, 2008 1:17PM
http://www.bloomberg.com/apps/news?pid=20601087&sid=aZvzZVTCUEKs&refer=home
Posted by guest , Sep 14, 2008 1:17PM
I gotta admit....I think www.lehmanbailout.com might have some serious potential. I bet someone buys it up on ebay for like a g. The dude selling it does make some points about who would want to own it.
Posted by guest , Sep 14, 2008 1:18PM
Meh. I talked to a friend of mine last night who used to work at LEH legal--he was so glad to get out of there and that was when the going was good.
He was kinda bummed that all the people who he knew there; if they are still there, then their careers are done for.
I couldn't help but laugh.
If there is one thing I love about this economy, nobody cares if you lose your job--and that's from janitor up to a CEO.
Boo the fuck hoo. Enjoy your Mediterranean salads in the company canteen. Next month, you're gonna have to go back to buying the plastic bags of Garden Fresh! at the ShopRite.
Posted by guest , Sep 14, 2008 1:20PM
Anyone wanna make the market on how much this ends up getting? Seriously.
http://cgi.ebay.com/LEHMAN-BROTHERS-AIG-WAMU-BAILOUT-DOMAIN-NAME-PACKAGE_W0QQitemZ320299216040QQihZ011QQcategoryZ11153QQssPageNameZWDVWQQrdZ1QQcmdZViewItem
Posted by guest , Sep 14, 2008 1:21PM
Does anyone know why they're working on chapter 7 instead of chapter 11? In a chapter 7 situation, do employees still get their last week's paycheck? Next paycheck is this Friday BTW.
Posted by guest , Sep 14, 2008 1:23PM
Word has it that BS (Blackstone, in this case) has thrown in a highly competitive bid for struggling Lehman. Taking the shop private in this situation could indeed really make sense. Also, those toxic asets could be managed by blacky's distressed asset dudes.
Posted by guest , Sep 14, 2008 1:25PM
@30 - what happens to LEH's bondholders in that scenario? I can't imagine Blackstone would do a deal without some sort of Fed backstop.
Posted by guest , Sep 14, 2008 1:35PM
@31: Thing is that LEH does not (really not) have solvency/liquidity issues. Just look at their equity ratios (11% core, thats really a lot). Next, Leh's issues are currently sentiment driven. Taken private by BS, these issues would be resolved immediately. And, with Leh in the porstfolio, BS could use the fed#s window (ok, after some legal workarounds). Doesnt sound like liquidity issues. IMHO, BS would make a great deal.
Posted by guest , Sep 14, 2008 1:36PM
Barclays Withdraws From Lehman Talks Over Credit Guarantees
By Ben Livesey
Sept. 14 (Bloomberg) -- Barclays Plc, the U.K.'s third- biggest bank, pulled out of talks to buy Lehman Brothers Holdings Inc. because it could not agree on terms to ring fence troubled assets at the U.S. investment bank.
Barclays dropped out of discussions to buy all or parts of New York-based Lehman because it could not secure guarantees from the U.S. government or agree on terms to mitigate potential losses in the firm's investment banking division, a London-based spokesman for Barclays said in a telephone interview today.
Posted by guest , Sep 14, 2008 1:36PM
@31 - Could LEH bondholders get lose without causing a default event on all derivative transactions? Doesn't seem like the type of takedown event Feds would be happy with.
Posted by guest , Sep 14, 2008 1:37PM
@31 - Could LEH bondholders get lose without causing a default event on all derivative transactions? Doesn't seem like the type of takedown event Feds would be happy with.
Posted by guest , Sep 14, 2008 1:38PM
@30
What would happen to Lehman's credit rating also? No one will deal with a privatised Lehman.
Doesn't make sense. The only reason maybe Blackstone thinks it can make money from such a transaction by breaking up Lehman.
Posted by guest , Sep 14, 2008 1:38PM
What's wrong with the plastic bags of Garden Fresh?
$$$
Posted by guest , Sep 14, 2008 1:39PM
Pronzo is going to filled with Lehmers ordering their egg whites healthy wraps. The Quodoba bad mexican joint should bring back the naked cowboy to cheer the Lehmers up. Bad times again/upon us.
Why were there always cops manned at all Lehman entrances? They disappeared a few weeks ago.
Posted by guest , Sep 14, 2008 1:40PM
Sounds like Barclays is out
http://www.nytimes.com/2008/09/14/business/14lehman.html?_r=1&hp&oref=slogin
Posted by guest , Sep 14, 2008 1:43PM
no way government is going to fund a Barclay buyout of Lehman. Why spend tax payer to help a foreign bank?
Posted by guest , Sep 14, 2008 1:45PM
http://cgi.ebay.com/LEHMAN-BROTHERS-AIG-WAMU-BAILOUT-DOMAIN-NAME-PACKAGE_W0QQitemZ320299216040QQihZ011QQcategoryZ11153QQssPageNameZWDVWQQrdZ1QQcmdZViewItem
Posted by guest , Sep 14, 2008 1:46PM
DB s DWS Access group has apparently put clients into the "timber" fund of a group which is bleeding investors from the nose . The rip is coming from Boston it seems
Posted by guest , Sep 14, 2008 1:46PM
Would Lehman enter into Chapter 7 or Chapter 11 bankruptcy?
Posted by guest , Sep 14, 2008 1:49PM
BK isn't going to happen.
My bet: Treasury & FED fold and backstop the deal with a guarantee.
Posted by guest , Sep 14, 2008 1:55PM
Barclays!! it is!
Check wsj.com
Posted by guest , Sep 14, 2008 2:01PM
Will Lehman's foreign operations even be allowed to take new money if Lehman is in BK. Japan and other markets are closed, but the NB brand, while not big, is known in Europe. It would seem that regulators, even in Switzerland would step in.
Posted by guest , Sep 14, 2008 2:01PM
WSJ says Barclays is now walking away from the deal...
Posted by guest , Sep 14, 2008 2:09PM
Will Lehman's foreign operations even be allowed to take new money if Lehman is in BK. Japan and other markets are closed, but the NB brand, while not big, is known in Europe. It would seem that regulators, even in Switzerland would step in.
Posted by SlashAndBurn , Sep 14, 2008 2:11PM
Anyone know how pensions are handled? BSC didn't have pensions, but LEH does (did).
Those fall under Federal jurisdiction, and can't be sold off/wiped out?
Posted by guest , Sep 14, 2008 2:13PM
@49 forget about it. Goes to the PBGC
Posted by tduncaneu , Sep 14, 2008 2:25PM
@43 Chapter 11 but brokerage operations go into receivership to protect and provide liquidity (some) for client funds I believe.
Bottom line - Bankruptcy best option if Fuld really beleives that equity not worth 0. He has liquidity, if they try to jerk that away all hell would break loose. Bankruptcy provides a better auction-like environment and some time to maximize bidding and structuring on at least some of assets.
Feds can't just natioanlize a company. Remember, Bear shhldrs got $10 at the end of the day.
Posted by SlashAndBurn , Sep 14, 2008 2:36PM
@50, thanks. Seems the govt pays out, though:
"We will pay your pension benefit when you have satisfied all of the conditions required by your pension plan and apply to PBGC to begin payments."
http://www.pbgc.gov/workers-retirees/benefits-information/content/page13200.html
Posted by guest , Sep 14, 2008 2:40PM
WSJ reporting that no one is currently in bidding for LEH, Barclaws walked and BofA not interested without federal backstop, and LEH is working on Chapter 7 via Weil Gotshal.
Sounds like people are working frantically to try to figure out what to do with all the contracts.
The purported obstacle to Barclays, shareholder approval, isn't something that can be fixed in time if it's actually true.
This is increasingly looking like liquidation, which means mark-to-market is going to take on a new meaning.
Posted by guest , Sep 14, 2008 2:43PM
WSJ reporting that no one is currently in bidding for LEH, Barclaws walked and BofA not interested without federal backstop, and LEH is working on Chapter 7 (for the brokerage, at least) via Weil Gotshal.
Sounds like people are working frantically to try to figure out what to do with all the contracts.
The purported obstacle to Barclays, shareholder approval, isn't something that can be fixed in time if it's actually true.
This is increasingly looking like liquidation, which means mark-to-market is going to take on a new meaning.
Posted by guest , Sep 14, 2008 2:57PM
"This is increasingly looking like liquidation, which means mark-to-market is going to take on a new meaning."
You have that right. It will be interesting to see what these assets they've been hiding are really worth. And once that is clear, quite a few other banks are in big trouble.