Oh, this could get ugly. The Wall Street Journal reports that Lehman’s unsecured creditors are calling on the bankruptcy court to examine why the investment bank ran out of funds. The suit argues that JP Morgan abused its role as clearing bank, retaining $17 billion of excess collateral which Lehman could have used to stave […]
Read more...Boy, there have been bigger bad investments (TPG putting $7 billion into WaMu comes to mind) but seldom has one come cropper as quickly as Mitsubishi UFJ’s $9 billion interest in Morgan Stanley. The bank took a cool $500 million one-day loss. From Bloomberg: Mitsubishi UFJ Financial Group Inc. took a $506 million paper loss […]
Read more...Gretchen Morgenson in the New York Times reports that Goldman and no other Wall Street firm was involved in the AIG rescue talks and an AIG failure would have created a hole as big as $20 billion in Goldman’s balance sheet. This is special dealing, pure and simple. Even if AIG needed to be salvaged […]
Read more...The statistics on retail brokers at banks are a bit dated, since they don’t reflect the fact that Merrill, aka The Thundering Herd, is soon to be part of Bank of America (I am not certain whether the deal has actually closed). Nevertheless, the fact that WaMu has a meaningful broker-dealer operation was seldom mentioned […]
Read more...The Sage of Omaha is famous for his nose for a bargain, and has experience in the securities industry thanks to his rescue of Salomon Brothers in the wake of its early 1990s Treasury bond scandal. While Goldman has a storied name, great relationships, and has fared better than any other securities firm in the […]
Read more...I had wondered when the Japanese would step to the fore. Japanese banks and trading companies are cash rich and undamaged by the financial crisis, having for the most part steered clear of of subprime assets. Note that the Mitsubishi group has long been close to Morgan Stanley. Indeed, it was a surprise to many […]
Read more...The latest “Let’s do something, anything” move to rescue the financial system is yet another example of expediency trumping sound long-term measures. The motivation for making Goldman and Morgan Stanley banks seems obvious: the powers that be seem determined to prevent either firm from going under. Being banks gives the firms access to a expanded […]
Read more...Paulson has tweaked the language of the bailout bill, with the Freudian-slip acronym TARP (“Troubled Asset Relief Program”) to make some additions that in theory make it more sweeping but in practice, with no review or oversight, the Treasury can do what it bloody pleases; the rest of the language of the bill, besides the […]
Read more...A mere two weeks ago, the Fannie/Freddie rescue was called “the mother of all bailouts” by some commentators. If the plans of the Administration come to fruition, it will shortly be surpassed by the $700 billion mortgage rescue plan proposed by Hank Paulson late last week. The increase of the request from the initial $500 […]
Read more...For those who thought outsized pay for investment bankers and traders was a thing of the past, think again. Ditto with the idea that having been a key actor in a financial failure dims one’s employment prospects. The poster child is John Meriwether, the head of hedge fund Long Term Capital Management, whose collapse in […]
Read more...New measures to shore up the markets are coming so fast and furious that it is becoming hard to keep track of them. What most people do not realize is that they produced some not-very-pretty unintended consequences. As we discussed (courtesy reader Lune) at the time: 1) Congress raises conforming limits on Fannie/Freddie to help […]
Read more...The independent securities firm model comes under siege as Morgan Stanley and Goldman shares took a beating today. From Bloomberg: Morgan Stanley and Goldman Sachs Group Inc., the biggest U.S. securities firms, tumbled the most ever in New York trading after a government rescue of American International Group Inc. failed to ease the credit crisis. […]
Read more...The Wall Street Journal tells us that some less-than-nimble-footed hedge funds wound up not moving their prime brokerage accounts quickly enough out of Lehman to avoid having those assets frozen in the bankruptcy. Most readers will probably find it hard to work up much sympathy for these Masters of the Universe. Despite the name “prime […]
Read more...Twp readers, Steve and Julian e-mailed us about the Bloomberg story below, that the Fed repaid JP Morgan for an advance made to Lehman after its bankruptcy filing: Lehman Brothers Holdings Inc., the securities firm that filed the biggest bankruptcy in history yesterday, was advanced $138 billion this week by JPMorgan Chase & Co. to […]
Read more...I received this automated e-mail today from Institutional Investor, and the headline is indeed “Lehman is Tops in Fixed Income,” referring to II’s highly regarded investor research rankings: Lehman Is Tops In Fixed IncomeAdding 12 team positions in High Yield sectors, Lehman Brothers finishes with 47, 11 more than second-place JPMorgan, to lead the All-America […]
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