Category Archives: Investment banks

Irony Alert: "Lehman is Tops in Fixed Income"

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 […]

Goldman Profit Falls 70%

No surprise that brokerage firm results are deteriorating, and at least Goldman is still profitable and idd a tad better than anticipated….although I haven’t dug into the numbers to see how solid those profits are. But bad numbers from Goldman would not have gone over at all well this week. From the Wall Street Journal: […]

The Fire Sales Begin: Lehman Unloading $852 Million of LBO Loans (Updated)

Ah, now the script that everyone was trying to avoid, that of an institution failing, selling assets in bulk leading to distressed prices, which forces other players to mark their books down to the new market prices, leading to losses and reductions of already-scarce equity, is now playing at your local credit market. Lehman has […]

Banks Can Now Use Deposits to Fund Investment Banking Operations?

Reader Michael M called our attention to this statement in a Financial Times article: The Fed also suspended rules that prohibit banks from using deposits to fund their investment banking subsidiaries. Was this the quid pro quo for Band of America buying Merrill? If so, the repercussions extend beyond BofA. This is a time when […]

Creditors May Be Able to Claw Back Lehman 2007 Bonuses

This reading comes from Adam Levitin at Credit Slips: Lehman paid out around $5.7 billion in bonuses in 2007. Are those bonuses safe? Maybe not…. Thus, the key question is whether Lehman was solvent when it paid out the bonuses? (The statute of limitations goes back past 2007, fwiw.)…..on a balance sheet basis, that might […]

Bank of America Buys Merrill For $29 a Share

Talk about a shotgun wedding. From the Wall Street Journal (hat tip reader Saboor): In a rushed bid to ride out the storm sweeping American finance, 94-year-old Merrill Lynch & Co. agreed late Sunday to sell itself to Bank of America Corp. for roughly $44 billion. The deal, which was being worked out in 48 […]

NY Times: Lehman Filing For Bankruptcy (Update: Gross Sees "Tsunami")

Hat tip readers dd and viv on this update from the New York Times’ Dealbook: Lehman will seek to place its parent company, Lehman Brothers Holdings, into bankruptcy protection, while its subsidiaries will remain solvent while the firm liquidates its holdings, these people said. A consortium of banks will provide a financial backstop to help […]

Bank of America, Merrill in Merger Talks (Updated)

The initial report from the Wall Street Journal is skeletal (hat tip reader Randy(: Bank of America and Merrill Lynch & Co. Inc. are in merger discussions, according to people familiar with the matter. The talks come amid a Wall Street scramble to sort out a potential liquidation of Lehman Brothers Holdings Inc. Bank of […]

Lehman Bankruptcy Looms; Emergency Lehman Swaps Session Today (Slightly Revised and Updated)

Reader Steve A , Scott and Saboor also pointed to the Bloomberg story reporting that the International Swaps Dealers Association had announced an emergency Sunday session to net Lehman-related position in anticipation of a possible bankruptcy filing, From Bloomberg: Wall Street prepared for a potential Lehman Brothers Holdings Inc. bankruptcy after Barclays Plc said it […]

NY Times: Barclays, Most Likely Lehman Suitor, Walks from Deal

The noose is tightening, with the powers that be facing the unattractive choices of a politically unpopular bailout (and egg on their face) versus an unwind of Lehman with potentially disastrous consequences. Will Paulson blink? So far, the word is no. From the New York Times (Hat tip reader DaddyMac): Unable to find a savior, […]

WSJ: Private Sector Resolution Looking Less Likely; Pressure Continues for Bailout (Updated)

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 […]

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, […]