Preparations made for Lehman Brothers to get insolvency protection

[dipsydoodle]

Source: BBC NEWS

Preparations are being made in case the US investment bank Lehman Brothers has to file for bankruptcy protection.

The firm was pushed to the brink on Sunday after UK bank Barclays pulled out of talks to buy most of Lehman.

If no new financing is found before Wall Street opens on Monday, Lehman will have to seek so-called Chapter 11 bankruptcy protection.

In the UK, accountancy firm PWC has been lined up to run the British operations of Lehman.

Read more: http://news.bbc.co.uk/1/hi/business/7615712.stm

---

Support from the Fed has been ruled out and the markets are expected to react accordingly tommorow.

Subsidiary link here :

Preparations have been made for Lehman Brothers, the substantial US investment bank, to obtain protection from its creditors under US Chapter 11 insolvency procedures.

I have also learned that PWC, the leading accountancy firm, has been lined up to run the UK operations of Lehman in the event that it is put into administration under our insolvency arrangements.

The preparations for insolvency protection have been made because the US authorities have become gloomy that Lehman can be rescued.

"The only thing that can prevent Lehman collapsing would be a huge injection of taxpayers' money" said a banker close to the rescue negotiation. "Hank Paulson has made it clear he doesn't want to do that."

http://www.bbc.co.uk/blogs/thereporters/robertpeston/2008/09/lehman_insolvency_protection_l.html

[ixion]

1. insolvency protection = bailout

:argh:

[dipsydoodle]

3. I picked this up from LBN on TV

before I went into the BEEB news site. On TV they'd said that a bailout had already been ruled out.

[Ghost Dog]

4. By 'insolvency protection' they seem to mean Chapter 11

bankruptcy.

However, 'preparations' could also imply a last-ditch ultimatum to Paulson for a bailout.

imho no bailout or similar should take place, and even chapter 11 provisions let Lehmans management and other guilty parties off very lightly: a lot of their personal wealth should also be lost, at the very least.

[quiet.american]

27. Yes, I read their CEO's exit package will dive from $956M to about $60M. What a tough break, eh? nt

[nadinbrzezinski]

2. Expect them to go down SHARPLY

[Yupster]

7. Even under a merger or bailout their stock

will be worthless or virtually worthless.

What a merger would protect is the bondholders. Those are regular people who bought a $ 5,000 bond because it paid a safe decent interest rate.

The stockholders are going to get nothing regardless.

An example would be Bear Stearns where the stock went from $ 60 to $ 1 almost overnight. The merger saved the bondholders, but the stockholders got nothing or nearly nothing.

[Bearheim]

5. My Friends

What we need is a Hockey Mom!

A pit bull with lipstick to straighten these bankers out!

(Do I have to mention I was being sarcastic?)

[peacetalksforall]

34. Very good - a little insertion to remind us. You should post this remark every time

we hear more crime revelations.

[whistle]

6. That is called bankruptcy, Lehman is bankrupt

[BR_Parkway]

8. Bank of America Is Said to Abandon Talks to Buy Lehman, Following Barclays

Source: Bloomberg

Sept. 14 (Bloomberg) -- Bank of America Corp. abandoned talks to buy Lehman Brothers Holdings Inc., according to a person with knowledge of the matter, less than three hours after Barclays Plc said it wouldn't buy the faltering investment bank.

Bank of America, the biggest U.S. consumer bank, and Barclays, the U.K.'s third-largest lender, had been among the leading candidates to acquire all or parts of New York-based Lehman. The Wall Street Journal reported that Bank of America had entered into merger talks with Merrill Lynch & Co., citing unidentified people.

The two potential bidders pulled out amid a third day of emergency negotiations led by the U.S. Treasury and Federal Reserve. Leigh Bruce, a spokesman for London-based Barclays, confirmed in a phone interview today that his firm had withdrawn. Spokespeople for Bank of America didn't immediately return calls seeking comment.

The U.S. government is racing to find a solution for Lehman before markets open tomorrow, two people familiar with the situation said. Barclays walked away because it couldn't get guarantees from the government or agree on a private-sector deal to mitigate what it called Lehman's ``open-ended'' trading obligations.

Read more: http://www.bloomberg.com/apps/news?pid=20601087&sid=aiu6I5m66pcw&refer=home

---

well there she goes, one more nail in a coffin that's quickly closing

[DJ13]

9. Bye Bye Stock Market

[BR_Parkway]

10. And now BOA is going after Merrill - guess we'll see AIP go down

by Wed morning at the latest. Wonder how long before Citi falls.

[GOPNotForMe]

11. AIP or AIG? nt

[BR_Parkway]

12. "G" - typing while munching on chips

[GOPNotForMe]

13. Or maybe you had Palin on the brain?

AIP = Alaska Independence Party :)

[BR_Parkway]

14. Possibly, but right now with this mess, Palin seems like nothing more

than a distraction. Heard one of the endless talking heads this am mention that every day McSame can keep the pundits talking about anything but the economy was a good day for his campaign - and my thought then was that is exactly what Palin was used for.

[lurky]

15. "Barclays walked away because it couldn't get guarantees..."

"from the government."

So really, these buyers were looking for another taxpayer bailout. Since Paulsen has finally figured out he can't bail all of Wall Street, maybe the cards are going to start falling faster.

[Klukie]

16. Lehman sale talks falter, bankruptcy fears grow

Source: Reuters

By Dan Wilchins and Glenn Somerville

NEW YORK/WASHINGTON (Reuters) - Talks to sell Lehman Brothers Holdings faltered on Sunday, triggering concerns that the investment bank may be heading into bankruptcy by the end of the day and prompting banks to call an emergency trading session to unwind positions with the firm.

Barclays Plc, which had appeared to be frontrunner to take over Lehman -- excluding its toxic mortgage-related assets -- said it pulled out of the bidding, as top bankers and regulators met for a third day to try to resolve the crisis.


Read more: http://www.reuters.com/article/topNews/idUSN0927996520080914

[DainBramaged]

17. Let them go under, I'm sick of bailing out these fat cats

[Demobrat]

19. Tell that to the tens of thousands of employees, regular people with

bills to pay, facing unemployment. You know, the ones who WON'T walk away with multi-million dollar severance packages.

[lapfog_1]

23. It's not even them...

It's not the executives or the employees of Lehman Brothers.

It's our country and, even, the world economy that may be at stake.

We went from "bubble market" in housing two years ago... to "injections of cash into the liquidity markets" last year to Bear Sterns, Freddie Mac and Fannie May, lots and lots of small to medium bank failures (FDIC insured) to now Lehman Brothers.

The housing bubble, coupled with an oil shock, coupled with years and years of federal deficit spending and a huge mounting debt AND an occupation that keeps going and going... and you have a recipe for a depression.

Clinton ran a modest surplus for what, 1 or 2 years of his Presidency... we needed to run the surplus for 50 years to pay off the then 5 trillion dollar debt. 50 years. We did it for 1 or so. Now junior, through his tax cuts and his war, has doubled the debt. Now we would need to run the Clinton surplus for 100 years. And I think the people that financed it are now having second thoughts.

We are about to become another Mexico or worse. Talk about war on the middle class. All but ONE of my 24+ year old nieces and nephews are living with their parents. And they all have jobs. One of them just lost her house in foreclosure... a house that she and her husband just purchased 3 years ago. Adjustable rate mortgage went to a point where they couldn't make the payments. Poof. Now she is living with her dad again.

It's going to get a lot worse... and real fast. They have been running like crazy to keep the plates spinning on the sticks until after the election. I'm betting they won't do it. This Christmas will not be a "happy time" in the land.

[natrat]

24. by design? tell me the neocons or whoever didn't orchestrate that oil shock

[lapfog_1]

26. Quite possible...

The Neocons want a dictatorship here in the US, complete with a robust military, a military that will go fight the Muslims and secure Israel's future.

The oligarchs want an end to the middle class (and, especially those in the middle class that could become millionaires, ala the dotcommies). They would prefer the US and the world to be poor and starving, the better to keep wages down and, therefore, the price of their luxury goods and services down. The destruction of the middle class is a clear goal (even if it's really shortsighted). They are willing to follow the Neocon lead to dictatorship if it means the destruction of those they despise. Besides, they figure that they are now "world citizens" and so what if the US becomes more like many of the other countries they maintain homes and businesses in.

The theocrats have also made a pact with the Neocons. They are hoping to bring about the end times and a war in the middle east suits them just fine. They think they are using the Neocons to accomplish their goals and the Neocons believe that THEY are using the Christian right to help achieve THEIR goals. The Theocrats are just fine with a dictatorship as well because it won't matter when Christ returns to sit on the throne and rule for 1000 years before the final judgment. It just makes the whole process easier if there is a dictator, especially a Christian fundamentalist dictator.

[DainBramaged]

32. Sorry, YOU support them, they are part of the reason for the housing crisis.

[customerserviceguy]

36. Well, they should have saved it up for a rainy day

when they were making huge fucking bonuses during the rise of the stock market these past several years. They were all taking large amounts of money out of they system, banking on people's greed to shaft the next guy, and their racket finally ran its course. Same goes for the realtwhores who goaded people into paying $350,000 for a $100,000 house.

I refuse to feel sorry for people who add nothing to production, but make more than real producing people like farmers, miners, manufacturing workers, and even salespeople who distribute products. The old market has been obsolete for a goodly number of years, we have modern means of doing the tax-deductable gambling that passes for "investment" that no longer need highly paid armies of drones.

[BlooInBloo]

18. They're gone. The only question is whether or not WaMu is too.

http://calculatedrisk.blogspot.com/

[DJ13]

20. Good, let them go under & crash the market

It was destined to happen eventually (Paulson & Bernanke's main job was to delay it), better it happens on Bush's watch than right after Obama takes office so everyone can see who was really responsible.

[Speck Tater]

21. ANY rescue will only help Bush/McCain

by hiding the disaster of their leadership from the public view for a little while. This economy MUST crash and burn to shake out all the abuse. Better it happens BEFORE the election so people can see with their own eyes the consequences of Bush's failed policies.

A bailout just means postponing the inevitable AND giving McCain a better shot at winning the election by protecting the Repugs from their own folly.

Yes, people WILL lose jobs. But anything short of losing jobs doesn't seem to motivate people to realize just how badly the GOP is screwing them. They are ALREADY screwed. Those jobs are ALREADY dead jobs walking. The only question is, do we let reality come to the surface for all to see, or do we hide reality for a few more months to help McCain win? And THEN let reality prevail?

[natrat]

25. don't depressions last for years and sometimes facism is a result

[Speck Tater]

28. The depression CANNOT be prevented. It can only be delayed.

Shall we delay it so that it happens under Obama's watch? Or would we rather it happens under the watch the person actually responsible for it?

[Tallison]

35. The New Deal was the progeny of our last

so not necessarily?

[Odin2005]

38. I want all thse corporate fuckers' houses of cards to burn down.

The easier it is to cut off thier heads and begin afresh. The economic system is corrupt beyond redemption, it must die so a newer and better one can be erected.

[gordianot]

22. The game is almost over. This promises to bring Hurricanes to everyone.

[Better Believe It]

29. Lehman to File for Bankruptcy Protection

Source: New York Times September 14, 2008, 5:55 pm

Lehman Brothers will file for bankruptcy protection on Sunday night, according to people briefed on the matter, in the largest failure of an investment bank since the collapse of Drexel Burnham Lambert 18 years ago.

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 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.

Moreover, changes to the bankruptcy code mean that counterparties to Lehman’s credit-default swaps can seize their collateral at any time, posing an enormous potential risk to the entire financial markets. Investment banks, hedge funds and other financial players labored throughout Sunday to offset their exposure to Lehman, moving their contracts to other firms.

Lehman has retained the law firm Weil, Gotshal & Manges to prepare its bankruptcy filing. The firm’s restructuring head, Harvey Miller, also worked on Drexel’s bankruptcy back in 1990.



Read more: http://dealbook.blogs.nytimes.com/2008/09/14/lehman-to-file-for-bankruptcy-protection/

[MidwestTransplant]

30. That's too bad.

[Tallison]

31. What does this mean?

in terms of direct and collateral damage to the market (for me, someone with limited background in economics)? Any good analysis links someone can provide? Thanks.

[peacetalksforall]

33. And the Federal Reserve has agreed to accept lower-quality assets in return for loans from the gover

Isn't that a form of bailout? How much money does that involve?

All these companies and their smart axx idea hotties and the complicit politicians. They pulled one over on the serfs. Are the barons happy yet?

[nebenaube]

37. ummm....

ROASTED BARON... TASTES GOOD!