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View Full Version : Lehman Brothers bank to go into insolvency (maybe)



eliquant
14th September 2008, 22:01
Well "Lehman Brothers" had too much exposure to mortgage backed assets so if the US government doesn't inject funds with a rescue plan (it said it will not) then it means insolvency which admitedly takes months to complete.

Barclays and Bank of America pulled out of any rescue deal today.

So what does this means for the other financial institutions which has money owed to it by Lehman's ..... yes it has a knock on effect.

I think there's going to be many Unix Java / C# CVs sent out from Lehman's tomorrow.

Worst of it is that I got an old mate with 3 daughters there who I've not seen in a long time, god knows what he must be thinking.

PRC1964
14th September 2008, 22:06
I know a couple of people there. They have however made so much dosh over the last few years that I doubt they'll suffer too much.

Cyberman
14th September 2008, 22:45
Well "Lehman Brothers" had too much exposure to mortgage backed assets so if the US government doesn't inject funds with a rescue plan (it said it will not) then it means insolvency which admitedly takes months to complete.

Barclays and Bank of America pulled out of any rescue deal today.

So what does this means for the other financial institutions which has money owed to it by Lehman's ..... yes it has a knock on effect.

I think there's going to be many Unix Java / C# CVs sent out from Lehman's tomorrow.

Worst of it is that I got an old mate with 3 daughters there who I've not seen in a long time, god knows what he must be thinking.



.. and poor old New Lie scapegoat Northern Rock had no US-Subprime. All they wanted was a short-term loan after money-markets dried up, but Mervyn King in his wisdom initially refused, causing a bank run, draining 14 Billion from savings, which is virtually the amount that they now owe in loans to the BofE. At least the US government is trying to help its banks rather than kill them through ineptness and starvation of funds. :suicide:

PM-Junkie
14th September 2008, 22:49
.. and poor old New Lie scapegoat Northern Rock had no US-Subprime. All they wanted was a short-term loan after money-markets dried up, but Mervyn King in his wisdom initially refused, causing a bank run, draining 14 Billion from savings, which is virtually the amount that they now owe in loans to the BofE. At least the US government is trying to help its banks rather than kill them through ineptness and starvation of funds. :suicide:

So the US government has stepped in to save Lehmans? When did that happen?

Cyberman
14th September 2008, 22:57
So the US government has stepped in to save Lehmans? When did that happen?


They are involved in trying to sort out a deal. I am sure they will have to provide some guarantees to the buyer, but a collapse of Lehmans would have a massive knock-on effect throughout the financial markets causing a domino effect. I cannot see the USA allowing that to happen, but time will tell.:eyes

scooterscot
15th September 2008, 05:30
No maby about it.... going going gone!

We're all doomed.

BlasterBates
15th September 2008, 05:46
Merrill bought by Bank of America (http://www.bloomberg.com/apps/news?pid=20601087&sid=aNoc_.dGgCYY&refer=home)

Lehmans in chapter 11...and Merrill Lynch bought before it had to go too, two banks in one day. The dollar has held up, but the stock markets will take a pounding. :eek

GreenerGrass
15th September 2008, 07:04
Merrill bought by Bank of America (http://www.bloomberg.com/apps/news?pid=20601087&sid=aNoc_.dGgCYY&refer=home)

Lehmans in chapter 11...and Merrill Lynch bought before it had to go too, two banks in one day. The dollar has held up, but the stock markets will take a pounding. :eek

I think the news on Merrill Lynch is just as significant.
Who next? FTSE down 2.5% already.

Don't panic! DON'T PANIC!!!

ace00
15th September 2008, 07:14
I think the news on Merrill Lynch is just as significant.
Who next? FTSE down 2.5% already.

Don't panic! DON'T PANIC!!!

Too late! TOO LATE! :smile
It's going to be nasty today in the UK. FTSE -5% :( More ?

techno
15th September 2008, 08:31
What do you think will happen to the dollar today, up into the 1.80+ mark or stay relatively where it is...?

aceboy
15th September 2008, 08:53
The ML news is being viewed by the market as a positive. The BOA / ML merger will create a major power house on wall street...

eliquant
15th September 2008, 09:01
Well I mean at the end of the day we've seen it all before Barings collapsed and just got sold off to ING and they took the good parts of the business, same goes for Natwest Markets (remember them), they had bits of their company sold off and eventually bought by RBS.

Its not the end of the world or the financial world, they were just misfortunate in investing heavily in mortgage backed assets.

BrilloPad
15th September 2008, 09:05
Well I mean at the end of the day we've seen it all before Barings collapsed and just got sold off to ING and they took the good parts of the business, same goes for Natwest Markets (remember them), they had bits of their company sold off and eventually bought by RBS.

Its not the end of the world or the financial world, they were just misfortunate in investing heavily in mortgage backed assets.

:spel greedy

some of these were to ninjas. even some of the "prime" mortgages were lent with no proof of income. sometimes resets were years away so is probably more bad debts in the pipeline.

but the bonuses on the "profits" are already taken and are unlikely to be reclaimed back leaving the government and customers to pick up the mess.

I guess the rich have been screwing the poor for all time - its unlikely to change much.

sappatz
15th September 2008, 10:42
this Is The Largest Bankruptcy In Us History
This Day Will Be Marked In Stone

KentPhilip
15th September 2008, 10:52
.. and poor old New Lie scapegoat Northern Rock had no US-Subprime. All they wanted was a short-term loan after money-markets dried up, but Mervyn King in his wisdom initially refused, causing a bank run, draining 14 Billion from savings, which is virtually the amount that they now owe in loans to the BofE. At least the US government is trying to help its banks rather than kill them through ineptness and starvation of funds. :suicide:

Mervyn King was right to refuse them a loan. Northern Rock took a risk by running its business in a way that required money market loans, so if they dried up then Northern Rock should go bust.

What has happened now that the government has bailed them out is that the taxpayer has to pay more, and benefits such as the NHS will be hammered.

Cyberman
15th September 2008, 10:53
I think the news on Merrill Lynch is just as significant.
Who next? FTSE down 2.5% already.

Don't panic! DON'T PANIC!!!


I'm pretty sure I know, but commonsense prevents me from posting the name of a massive bank on here. Suffice to say, it is not HSBC, who I bank with.:wink

Cyberman
15th September 2008, 10:57
Mervyn King was right to refuse them a loan. Northern Rock took a risk by running its business in a way that required money market loans, so if they dried up then Northern Rock should go bust.

What has happened now that the government has bailed them out is that the taxpayer has to pay more, and benefits such as the NHS will be hammered.



All of our banks are run in this way, but our authorities pretend otherwise, and the BofE and HMG have been busy bailing others out secretly for months, and thus another is going to fail very soon, as the amounts required are so enormous. :moon:

Cyberman
15th September 2008, 11:02
Mervyn King was right to refuse them a loan. Northern Rock took a risk by running its business in a way that required money market loans, so if they dried up then Northern Rock should go bust.

What has happened now that the government has bailed them out is that the taxpayer has to pay more, and benefits such as the NHS will be hammered.


So has Mervyn King been wrong to give loans to all banks since then ? Have the other Central Banks been wrong to do the same ?
Giving short-term loans as long as the banks have assets to cover the loans is the obvious thing to do. Northern Rock was making a profit and assets far exceeded liabilities. Drying up of money markets had nothing to do with that bank at all, but was due to other banks overwhelming subprime losses. :moon:

dude69
15th September 2008, 11:08
ouch.

Just to be 100% sure, does this now mean that there are hundreds of unemployed ex-Lehman computer programmers here in London? That can't be good for rates, another 10% off?

DaveB
15th September 2008, 11:09
ouch.

Just to be 100% sure, does this now mean that there are hundreds of unemployed ex-Lehman computer programmers here in London? That can't be good for rates, another 10% off?

LB had around 5000 UK staff, so it's a fair bet that a good number of them were in IT.

BrilloPad
15th September 2008, 11:10
ouch.

Just to be 100% sure, does this now mean that there are hundreds of unemployed ex-Lehman computer programmers here in London? That can't be good for rates, another 10% off?

probably thousands unemployed in bangalore. We should have a whip round for Bob Shawadiwadi.

dude69
15th September 2008, 11:14
i have to confess (please forgive my ignorance) I didn't quite understand at first, what is meant by 'bankruptcy protection', I thought they were still trading, but deep in the doo-doo. Seems however people are clearing their desks.

I guess rather like Enron, when there was plenty of looting going on.

Any Lehman contractors here? Walking out with monitors under each arm?

Moscow Mule
15th September 2008, 11:18
i have to confess (please forgive my ignorance) I didn't quite understand at first, what is meant by 'bankruptcy protection',

It's the US equivalent of going into Administration

HairyArsedBloke
15th September 2008, 11:19
probably thousands unemployed in bangalore.

India's Nifty index was down like everyone else @ approx -3.5%.
However, their IT services index was off well over 5%. I suppose they are thinking the game is up.

Edit: Frack - I see the FTSE is off > 5% now.

DaveB
15th September 2008, 11:21
i have to confess (please forgive my ignorance) I didn't quite understand at first, what is meant by 'bankruptcy protection', I thought they were still trading, but deep in the doo-doo. Seems however people are clearing their desks.

I guess rather like Enron, when there was plenty of looting going on.

Any Lehman contractors here? Walking out with monitors under each arm?

They've filed for Chapter 11 bankruptcy protection which essentially allows them time to try and reorganise their finances without creditors demanding immediate repayment of debts. Management continue to run the business but all major financial decisions have to be approved by a Bankruptcy court at which both the company and it's creditors are represented.

Staff will have been told to go home and probably wont get paid any salary owed. The only people still working will the the senoir managers trying to find a way out of the mess.

Chapter 7 is the point at which they are officially put into Liquidation.

It's not over yet for Lehmans, but unless they come up with a plan that keeps the creditors happy they won't be around for much longer.

SandyDown
15th September 2008, 11:23
I told ya guys, time to escape from financial companies to Oil companies, pure black gold :banana:

BrilloPad
15th September 2008, 11:23
They've filed for Chapter 11 bankruptcy protection which essentially allows them time to try and reorganise their finances without creditors demanding immediate repayment of debts. Management continue to run the business but all major financial decisions have to be approved by a Bankruptcy court at which both the company and it's creditors are represented.

Staff will have been told to go home and probably wont get paid any salary owed. The only people still working will the the senoir managers trying to find a way out of the mess.

Chapter 7 is the point at which they are officially put into Liquidation.

It's not over yet for Lehmans, but unless they come up with a plan that keeps the creditors happy they won't be around for much longer.

No-one will trade with them now even if they could have survived.....

DOOMED

DaveB
15th September 2008, 11:26
No-one will trade with them now even if they could have survived.....

DOOMED

Yep, but it may allow them to come up with a plan that lets them split up the business and sell off the parts to other banks as a going concern. They didnt manage it last week, hence Chapter 11 this week. Lehman's as a name is probably gone for good, but the business and jobs that go with it may be rescued under another name.

BrilloPad
15th September 2008, 11:29
Yep, but it may allow them to come up with a plan that lets them split up the business and sell off the parts to other banks as a going concern. They didnt manage it last week, hence Chapter 11 this week. Lehman's as a name is probably gone for good, but the business and jobs that go with it may be rescued under another name.

It is a possibility - but why not just head hunt the people you want? I bet they would be so pleased of a job they would work for peanuts.

Apologies if this sounds a bit heartless - I do feel sorry for them. I have a couple of friends there - very upsetting.

ace00
15th September 2008, 11:29
FTSE has gone through -5% :(
Banking? HBOS Hbos Plc 189.0 -32.98%

sappatz
15th September 2008, 11:29
Lehman had 750 bln USD of derivatives in its book. guess we have a problem

eliquant
15th September 2008, 11:32
A sort of similar thing occured with Natwest Markets ... banks just get sold off in chunks as and when the problems start.

Its just the way of things.

BrilloPad
15th September 2008, 11:34
FTSE has gone through -5% :(
Banking? HBOS Hbos Plc 189.0 -32.98%

Possible buying opportunity?

dude69
15th September 2008, 11:35
Do we have any agents here?

How are things?

Being deluged with CVs from ex-Lehman staff?

Or will they come tomorrow.

BrilloPad
15th September 2008, 11:35
Lehman had 750 bln USD of derivatives in its book. guess we have a problem

Is that the notional value? How much of those were in credit derivatives?

They **could** have been shorting the major indexes and sitting on a packet now. Though I doubt it.

DaveB
15th September 2008, 11:46
It is a possibility - but why not just head hunt the people you want? I bet they would be so pleased of a job they would work for peanuts.

Apologies if this sounds a bit heartless - I do feel sorry for them. I have a couple of friends there - very upsetting.

It's easier as a corporate entity to buy a business, or a chunk of it, wholesale rather than try and cherry pick individuals. The bits of Lehmans that are carrying the losses will be let go and the rest broken up and sold as going concerns to the highest bidder. From what I can tell a lot of the Lehmans operation was still profitable, just not profitable enough to support the losses incurred by the bits involved in mortgage equities.

Fred Bloggs
15th September 2008, 11:51
Possible buying opportunity?For the brave (or foolhardy?).

Fred Bloggs
15th September 2008, 11:52
I told ya guys, time to escape from financial companies to Oil companies, pure black gold :banana:Yup. For now............

BrilloPad
15th September 2008, 11:55
For the brave (or foolhardy?).

The difference between the two can be quite small sometimes.

These DOOM things always cause overselling - whether stocks or house prices. Thing is I feel it will get worse before it gets better.

If you believe that stock markets look 18 months ahead(and are not just a casino) then there is trouble for a long while to come.

KentPhilip
15th September 2008, 12:05
So has Mervyn King been wrong to give loans to all banks since then ? Have the other Central Banks been wrong to do the same ?
Giving short-term loans as long as the banks have assets to cover the loans is the obvious thing to do. Northern Rock was making a profit and assets far exceeded liabilities. Drying up of money markets had nothing to do with that bank at all, but was due to other banks overwhelming subprime losses. :moon:

There are some banks that Mervyn was right to give loans to, but many that he has not been right to.

Yes giving loans to banks with assets is fine, but I don't agree that Northern Rock's assets exceeded liabilities - the reverse was the case. They had loaned billions to subprime borrowers who are unable to pay them back. So Northern Rock was insolvent and belonged in the garbage can.

ace00
15th September 2008, 13:48
Possible buying opportunity?

If you like playing with fire. There are British banks / building socs in your high street that will go bust and soon.
But American banks might be worth a look now.

Moscow Mule
15th September 2008, 13:53
They had loaned billions to subprime borrowers who are unable to pay them back. So Northern Rock was insolvent and belonged in the garbage can.

No they hadn't, and no they weren't. The reasons for their downfall are well documented.

aceboy
15th September 2008, 14:00
If you like playing with fire. There are British banks / building socs in your high street that will go bust and soon.
But American banks might be worth a look now.

All of them? RBS are looking pretty good at the moment, stock price aside....

Cyberman
15th September 2008, 14:19
There are some banks that Mervyn was right to give loans to, but many that he has not been right to.

Yes giving loans to banks with assets is fine, but I don't agree that Northern Rock's assets exceeded liabilities - the reverse was the case. They had loaned billions to subprime borrowers who are unable to pay them back. So Northern Rock was insolvent and belonged in the garbage can.



You're a fool because you have believed New Lie propaganda. Look at their balance sheet before Nationalisation and you will see that Northern Rock had massive assets. Without those assets how do you think the Rock would have already have paid off 10 Billion of loans in 9 months, and is due to clear all outstanding loans from the BofE by the end of 2010.

HMG have made a major mistake and by insisting on repayment of loans they are denying around 60 Billion pounds of extra lending to UK mortgage holders by forcing the Rock to call in its debts from those people, which at this time is plainly stupid. The first court case(Judicial Review) which New Lie will have to answer to is in January 2009.:rollin:

Cyberman
15th September 2008, 14:23
Kent Philip..... please stop quoting rubbish on Northern Rock. Try educating yourself !!

http://www.uksa.org.uk/

Bob Dalek
15th September 2008, 14:28
I see that the City whizz kids are playing "Destroy HBOS" again.

Cyberman
15th September 2008, 14:32
I see that the City whizz kids are playing "Destroy HBOS" again.


HBOS allegedly has loans of 200 Billion approx. coming up for renewal which it would normally refinance from the money markets, which is a delayed Northern Rock scenario. Come on Mervyn.... get your wallet out !!!:D