Category Archives: Banking industry

CNBC: Lehman Bad Bank Deal Drafted; Firms Expected to Kick in $3 Billion Each

A few hours ago, we went over the most recent report on the Lehman talks sponsored by the Fed (the Wall Street Journal had a remarkably detailed account), and it seemed as if the obstacles to getting a deal done were considerable. Although there was discussion of forming a “good bank/bad ban” structure, it sounded […]

Lehman Options Limited; Firm Hires Bankruptcy Attorneys

The New York Times and the Wall Street Journal provided Saturday afternoon updates on Lehman. The discussions increasingly acknowledge that a deal may not be in place by Sunday as initially hoped (understandable, given the authorities’ unwillingness to provide support and the near-impossibility of doing adequate due diligence in a few days) and have moved […]

Emergency Fed Meeting: Paulson and Fed Attempt to Jawbone Wall Street to Rescue Lehman

Not surprisingly, it appears increasingly unlikely that private parties are wiling to take on a company that is pretty certain to have negative net worth, particularly when the point of a deal is to have someone, anyone take on the liabilities. But the Fed and Treasury are equally unwilling (at least as of now) to […]

Financial Times: BofA, JC Flowers, CIC Joint Lehman Bidders

The Financial Times tells us that a consortium, Bank of America, bank investor JC Flowers, and Chinese Investment Company are pursuing a joint bid for Lehman. At least on paper, this makes far more sense than a solo BofA bid. The bank already has a garbage barge on its hands in the form of Countrywide, […]

Moody’s Cuts WaMu Senior Debt to Junk; Bank May Sell Branches, Deposits

Washington Mutual, which has long looked wobbly, is moving beyond the point where it can survive in its current form (cynics might say in any form). Moody’s lowered the bank’s rating on its deteriorating financial condition and the difficulty of raising sufficient capital on viable terms. From Reuters: Washington Mutual Inc. was downgraded to below […]

Lehman: Deal Sought Before Monday; BofA Most Likely Suitor (Updated Again)

News reports appear to be converging on the hoped-for end game for Lehman. Whether that will come to pass is another thing entirely. First, the Washington Post, New York Times, and Wall Street Journal all report that the Fed and Treasury are brokering a deal, but are trying to avoid the use of public funds. […]

Central Banks Anticipate "Mother of Year-Ends" ‘Liquidity Crunch

We noted a few weeks ago that between large amounts of short term financial firm debt maturing in the third and fourth quarters, banks still leery of lending to each other, and liquidity always lower at year end (banks pull back from the market to square off their books), this November-Decemeber looks to be even […]

Preferred Shared Whacked in the Wake of Freddie, Fannie Bailout

Readers may recall that the Treasury’s rescue plan for the GSEs called for preferred stock dividend to be eliminated and for new investment by the government to come in the form of preferred stock that would be senior to the outstanding preferred. Needless to say, those actions have had a rather deleterious effect on the […]

Rogoff: Central Banks At Risk of Sinking Along With Banks

This Guardian article by Kenneth Rogoff (hat tip Mark Thoma) sends a blunt warning: central banks are taking on so much dodgy debt that they will put themselves at risk if they continue extending support to their banking systems. Rogoff argues (as we have) that the banking system needs to shrink (an inevitable consequence of […]

Freddie, Fannie Notable Comments (Mainly Not Pretty)

Not only is the commentary in the blogosphere on the Freddie and Fannie bailout program pretty skeptical, but even some normally staid MSM commentators have an eyebrow cocked. There is a comprehensive list of links on Freddie and Fannie from Barry Ritholtz. This post serves a different purpose and serves up some choice bits: Mohamed […]

Initial Negative Indicators on the GSE Bailout

Even though the stock markets are over the moon as of this hour (the Nikkei up nearly 440 points, other Asian markets up over 3%, bank stocks up even more), the all-important question is the reaction in the credit markets. It is far less enthusiastic. One might charitably call it underwhelmed. From John Jansen: I […]

Freddie, Fannie and (Sort of) Federal Home Loan Bank Bailout

The deed is done. Freddie and Fannie are now officially in conservatorship. Uncharacteristically, I listened to the presentation by Paulson and Jim Lockhart, which was thin on details (particularly size of new facilities and investments). The bombshell was the aside that not only is there to be a new secured lending facility for the GSE […]

Bye Bye Banks: Freddie and Fannie Preferred Holders to Take Big Hits?

The reporting on the main elements of the Freddie and Fannie rescue plan is converging as the content of official briefings leaks out. The stunner, which contradicts preliminary reports, is that the preferred shareholders in the GSEs will take losses. The Wall Street Journal reports that dividends on common will be eliminated and those on […]

NY Times: Freddie Overstated Its Capital

The New York Times, in “Loan Giant Overstated Its Capital Base,” sets forth an interesting bill of particulars as to where Freddie deviated from what one might consider a full and fair statement of its financial condition. Indeed, the article says that the widely-expected Sunday intervention was triggered by the GSE’s regulator determining that the […]

Two Surprisingly Costly Bank Failures in Two Weeks

Reader Steve A has been on the Friday night FDIC bank euthanasia watch, and in the last two weeks, he has discerned a disturbing trend. If this pattern persists, it seems a sign that things in bank-land may be much worse than is widely acknowledged. From last week’s post, “This Week’s Bank Failure Surprisingly Costly,” […]