The Wall Street provided an update on the Lehman rescue efforts which were consistent with its earlier coverage, which discussed considerable impediments to a “good bank/bad bank” solution with Wall Street firms providing the capital to support the bad bank. Note this contradicts the more optimistic report from CNBC on this approach (which we viewed […]
Read more...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 […]
Read more...The UK’s Times reports that AIG is looking to liquify some holdings to shore up its balance sheet and hopefully its stock price. While AIG, like Lehman, is making a “reassure investors” presentation ahead of its scheduled earnings announcement, the article gives the impression that AIG can provide a more concrete, readily executed salvage operation […]
Read more...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 […]
Read more...Even though all eyes have been on Lehman, the potentially more troubling slow-motion train wreck is AIG. The insurer is a large credit default swaps protection writer and provides a host of financing products. Not only is AIG a larger firm than Lehman and could trigger a systemic event in the CDS market alone, but […]
Read more...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 […]
Read more...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, […]
Read more...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. […]
Read more...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 […]
Read more...We had said a couple of days ago that while the conservatorship of Fannie and Freddie looked to be a credit event for credit default swaps, meaning they would trigger payment, we did not see this being a financial event (presumably there would be no loss, with the Treasury assurance to prevent a negative net […]
Read more...Bloomberg points out what some observers have already mentioned: putting Freddie and Fannie into conservatorship is a credit event as defined in credit default swaps (note defintions are sui generis, but this one was evidently close to universal in these agreements). Due to the Federal assurance that positive net worth will be maintained, this ought […]
Read more...It will be interesting to see if this dose of cold water from former Fed governor William Poole will take any sizzle out of the forceful equity rally (the Nikkei is up 425 points as of this writing, and US stock futures say the US markets will also show an impressive move up). From Bloomberg: […]
Read more...Sorry to be a bit heavy on Fannie and Freddie, but this is a historic event. These statements came in a five paragraph section in a New York Times article: Mr. Paulson added a mantra of his own: he privately said he didn’t want to “kick the can down the road” and leave the problems […]
Read more...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 […]
Read more...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 […]
Read more...