its official
and a good rehash of all the shit that took place this weekend....
discuss....:grandmais
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Lehman Brothers says it is filing for Chapter 11 bankruptcy.
Among details to be worked out: the accounting treatment for certain derivatives and repurchase positions, an area not currently covered by bankruptcy laws; and the orderly netting out of a variety of securities positions to which Lehman Brothers is contractually obligated.
Federal authorities are expected to be involved in the orderly disposition of Lehman assets. Sources knowledgeable about the weekend deliberations tell CNBC that without some government participation in the process, the bankruptcy filing by Lehman Brothers would cause major disruptions in the financial system.
Officials at the Federal Reserve and U.S. Treasury are taking steps to mitigate risk to the system and assure the orderly functioning of the markets tomorrow.
According to the New York Times, 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.
A consortium of banks will provide a financial backstop to help provide an orderly winding down of the 158-year-old investment bank. And the Federal Reserve has agreed to accept lower-quality assets in return for loans from the government, the New York Times says.
Meanwhile, officials at one of Lehman's most highly prized assets, asset manager Neuberger Berman, were hoping to find out their fate this afternoon, but were told to simply stay by their e-mails for an announcement that may or may not come.
Lehman's fate seem sealed after Barclays walked away from a deal to purchase the troubled Wall Street investment bank — brokers Sunday afternoon were streaming into their offices and a special trading session for credit default swaps was called.
BoFA Agrees to Buy Merrill Lynch
CNBC also has learned that Merrill Lynch <script type="text/javascript">cnbc_comboQuoteMove('popup_mer_ID0EGF15839609');</script>[MER 17.05
-2.38 (-12.25%)
]<script type="text/javascript"> cnbc_quoteComponent_init_getData("mer","WSODQ_COMPONENT_MER_ID0EGF15839609","WSODQ","true","ID0EGF15839609","off","false"); </script> has agreed to be acquired by Bank of America <script type="text/javascript">cnbc_comboQuoteMove('popup_bac_ID0EZCAC15839609');</script>[BAC 33.74
0.68 (+2.06%)
]<script type="text/javascript"> cnbc_quoteComponent_init_getData("bac","WSODQ_COMPONENT_BAC_ID0EZCAC15839609","WSODQ","true","ID0EZCAC15839609","off","false"); </script> for $29 a share, or $43.5 billion, after being pressured into a deal by federal regulators.
Pressure to find a merger partner came after Merrill liquidity started to "evaporating" on Friday. Merrill is worried about a sharp decline in share price on Monday, according to people inside the firm.
Merrill is expecting huge job losses -- the brokerage division will stay intact, but there will be large-scale reductions in workforce. A senior Merrill official was quoted as saying, "It's over."
"Right now all the firms are preparing for an orderly bankruptcy," said one Wall Street executive involved in the negotiations.
Bank of America also has offered to take the other side of Lehman’s swap trades — essentially insurance that Lehman had provided for the bonds of other companies.
Wall Street Prepares for Grim Monday
Meanwhile, the big Wall Street firms are balking at a plan to buy the bad debt because they say they don't have the money and are worried that they may be called on again to bail out another firm.
For that reason, Wall Street traders headed back to their offices this afternoon to prepare for the market impact of a pre-package bankruptcy and the unwinding of Lehman's balance sheet of approximately $700 million. One Wall Street trader involved in the discussions with officials from the Federal Reserve said every firm had determined their exposure to Lehman by this morning, and were preparing for some Fed help in unwinding the trades.
But officials from the Federal Reserve said they won't be involved in any such unwind — they told the Wall Street firms to work among themselves to determine how best to settle trades with Lehman.
Banks Set up $70 Billion Borrowing Facility
Ten Wall Street banks have also agreed to set up a collateralized borrowing facility, and committed to fund for $7 billion each.
The banks are Bank of America, Barclays, Citibank, Credit Suisse, Deutsche Bank, Goldman Sachs, JP Morgan, Merrill Lynch, Morgan Stanley, and UBS. These banks have said they are committed to fund $7 billion each for a $70 billion collateralized borrowing facility.
The banks add that they are working together to assist in maximizing market liquidity through ongoing trading relationships, dealer credit terms and capital committed to markets. This will also facilitate the orderly resolution of OTC derivatives exposures between Lehman and its counterparties.
All ten banks say they all intend to use expanded federal reserve primary dealers credit facility this week. The banks say their actions reflect "extraordinary market environment".
Bank of America sent a note to derivatives traders Sunday saying "Banks, brokers started netting Lehman trades from 2 p.m. today … trades netted are contingent on Lehman bankruptcy by midnight." The note continued "If no Lehman bankruptcy, netting of trades to be cancelled," meaning Bank of America's assumption of Lehman’s side of trades would end.
"It’s a way of lessening the pressure before Wall Street opens up tomorrow. The more they can reduce the total brokerage book for Lehman, the less heart-ache there will be for counterparties if Lehman files," Carlos Mendez, senior managing director of ICP Capital in New York.
The International Swaps and Derivatives Association called a special session from 2 p.m. to 4 p.m. but traders said that was purely symbolic. They intended to trade through the night.
The cost of insuring the bonds of investment bankers blew out in trading on Sunday.
Barclays Pulls Out
Earlier in the day,the United Kingdom's Barclays Bank pulled out of talks to buy Lehman. Barclays, which was considered the lead candidate to buy Lehman, reportedly was unable to agree on credit guarantees to shield them from potential losses.
Top Wall Street executives arrived Sunday morning for another round of talks to resolve the Lehman crisis, and sources said the group continued to work on how to handle the possibility of a deal not getting done before Monday.
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.
Work went on through the night on a deal drafted Saturday to have a consortium of banks backstop Lehman's bad assets and sell off the rest of the bank to Bank of America and Barclays. But sources said key parts of the deal remained controversial Sunday morning. As reported, the banks backstopping the bad loans were said to be balking at the amount of capital required of the banks and the sense that they were supporting a good deal for Barclays and Bank of America.
The larger group has been broken up into several working groups to devise responses to different possible outcomes. Among those, how markets can prepare for the possibility that Lehman might not find a buyer before Monday.
and a good rehash of all the shit that took place this weekend....
discuss....:grandmais
----------------------------------
By CNBC.com | 14 Sep 2008 | 07:35 PM ET <script language="javascript"> function UpdateTimeStamp(pdt) { var n = document.getElementById("udtD"); if(pdt != '' && n && window.DateTime) { var dt = new DateTime(); pdt = dt.T2D(pdt); if(dt.GetTZ(pdt)) {n.innerHTML = dt.D2S(pdt,((''.toLowerCase()=='false')?false:true));} } } UpdateTimeStamp('633570321217100000');</script>
Font size:
Lehman Brothers says it is filing for Chapter 11 bankruptcy.
Among details to be worked out: the accounting treatment for certain derivatives and repurchase positions, an area not currently covered by bankruptcy laws; and the orderly netting out of a variety of securities positions to which Lehman Brothers is contractually obligated.
Federal authorities are expected to be involved in the orderly disposition of Lehman assets. Sources knowledgeable about the weekend deliberations tell CNBC that without some government participation in the process, the bankruptcy filing by Lehman Brothers would cause major disruptions in the financial system.
Officials at the Federal Reserve and U.S. Treasury are taking steps to mitigate risk to the system and assure the orderly functioning of the markets tomorrow.
According to the New York Times, 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.
A consortium of banks will provide a financial backstop to help provide an orderly winding down of the 158-year-old investment bank. And the Federal Reserve has agreed to accept lower-quality assets in return for loans from the government, the New York Times says.
Meanwhile, officials at one of Lehman's most highly prized assets, asset manager Neuberger Berman, were hoping to find out their fate this afternoon, but were told to simply stay by their e-mails for an announcement that may or may not come.
Lehman's fate seem sealed after Barclays walked away from a deal to purchase the troubled Wall Street investment bank — brokers Sunday afternoon were streaming into their offices and a special trading session for credit default swaps was called.
BoFA Agrees to Buy Merrill Lynch
CNBC also has learned that Merrill Lynch <script type="text/javascript">cnbc_comboQuoteMove('popup_mer_ID0EGF15839609');</script>[MER 17.05
-2.38 (-12.25%)
]<script type="text/javascript"> cnbc_quoteComponent_init_getData("mer","WSODQ_COMPONENT_MER_ID0EGF15839609","WSODQ","true","ID0EGF15839609","off","false"); </script> has agreed to be acquired by Bank of America <script type="text/javascript">cnbc_comboQuoteMove('popup_bac_ID0EZCAC15839609');</script>[BAC 33.74
0.68 (+2.06%)
]<script type="text/javascript"> cnbc_quoteComponent_init_getData("bac","WSODQ_COMPONENT_BAC_ID0EZCAC15839609","WSODQ","true","ID0EZCAC15839609","off","false"); </script> for $29 a share, or $43.5 billion, after being pressured into a deal by federal regulators.Pressure to find a merger partner came after Merrill liquidity started to "evaporating" on Friday. Merrill is worried about a sharp decline in share price on Monday, according to people inside the firm.
Merrill is expecting huge job losses -- the brokerage division will stay intact, but there will be large-scale reductions in workforce. A senior Merrill official was quoted as saying, "It's over."
"Right now all the firms are preparing for an orderly bankruptcy," said one Wall Street executive involved in the negotiations.
Bank of America also has offered to take the other side of Lehman’s swap trades — essentially insurance that Lehman had provided for the bonds of other companies.
Wall Street Prepares for Grim Monday
Meanwhile, the big Wall Street firms are balking at a plan to buy the bad debt because they say they don't have the money and are worried that they may be called on again to bail out another firm.
For that reason, Wall Street traders headed back to their offices this afternoon to prepare for the market impact of a pre-package bankruptcy and the unwinding of Lehman's balance sheet of approximately $700 million. One Wall Street trader involved in the discussions with officials from the Federal Reserve said every firm had determined their exposure to Lehman by this morning, and were preparing for some Fed help in unwinding the trades.
But officials from the Federal Reserve said they won't be involved in any such unwind — they told the Wall Street firms to work among themselves to determine how best to settle trades with Lehman.
Banks Set up $70 Billion Borrowing Facility
Ten Wall Street banks have also agreed to set up a collateralized borrowing facility, and committed to fund for $7 billion each.
The banks are Bank of America, Barclays, Citibank, Credit Suisse, Deutsche Bank, Goldman Sachs, JP Morgan, Merrill Lynch, Morgan Stanley, and UBS. These banks have said they are committed to fund $7 billion each for a $70 billion collateralized borrowing facility.
The banks add that they are working together to assist in maximizing market liquidity through ongoing trading relationships, dealer credit terms and capital committed to markets. This will also facilitate the orderly resolution of OTC derivatives exposures between Lehman and its counterparties.
All ten banks say they all intend to use expanded federal reserve primary dealers credit facility this week. The banks say their actions reflect "extraordinary market environment".
Bank of America sent a note to derivatives traders Sunday saying "Banks, brokers started netting Lehman trades from 2 p.m. today … trades netted are contingent on Lehman bankruptcy by midnight." The note continued "If no Lehman bankruptcy, netting of trades to be cancelled," meaning Bank of America's assumption of Lehman’s side of trades would end.
"It’s a way of lessening the pressure before Wall Street opens up tomorrow. The more they can reduce the total brokerage book for Lehman, the less heart-ache there will be for counterparties if Lehman files," Carlos Mendez, senior managing director of ICP Capital in New York.
The International Swaps and Derivatives Association called a special session from 2 p.m. to 4 p.m. but traders said that was purely symbolic. They intended to trade through the night.
The cost of insuring the bonds of investment bankers blew out in trading on Sunday.
Barclays Pulls Out
Earlier in the day,the United Kingdom's Barclays Bank pulled out of talks to buy Lehman. Barclays, which was considered the lead candidate to buy Lehman, reportedly was unable to agree on credit guarantees to shield them from potential losses.
Top Wall Street executives arrived Sunday morning for another round of talks to resolve the Lehman crisis, and sources said the group continued to work on how to handle the possibility of a deal not getting done before Monday.
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.
Work went on through the night on a deal drafted Saturday to have a consortium of banks backstop Lehman's bad assets and sell off the rest of the bank to Bank of America and Barclays. But sources said key parts of the deal remained controversial Sunday morning. As reported, the banks backstopping the bad loans were said to be balking at the amount of capital required of the banks and the sense that they were supporting a good deal for Barclays and Bank of America.
The larger group has been broken up into several working groups to devise responses to different possible outcomes. Among those, how markets can prepare for the possibility that Lehman might not find a buyer before Monday.
up, and the blood will flow for another 6 months atleast. Who gets the blame? Bush, of course, it's all his fault, right?
