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Discussion Starter #1
So with the fall of first Bear Stearns and now both fannie mae and freddie mac having collapsed. How long before Lehmans follows ala Bear Stearns?

heck heres a report from cnn

Lehman suffers nearly $4 billion loss
Wall Street firm reveals major restructuring: spin-off of commercial real estate assets and plan to sell stake in investment management division.
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See all RSS FEEDS (close) By David Ellis, staff writer
Last Updated: September 10, 2008: 9:09 AM EDT

Asia markets slide on Lehman fears

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NEW YORK ( -- Lehman Brothers suffered one of its worst quarterly losses in the company's history, reporting a loss of nearly $4 billion Wednesday, and announced a series of drastic steps aimed at reviving the beleaguered firm.

The firm said it would spin-off part of its commercial real estate assets, sell a majority stake of its investment management division and slash its annual dividend.

Following a wild market session Tuesday in which shares plunged 45% to their lowest levels in nearly a decade, Lehman (LEH, Fortune 500) announced a $3.9 billion fiscal third-quarter loss, or $5.92 a share Wednesday morning. It was Lehman's biggest quarterly loss since the firm went public in 1994, exceeding a $2.8 billion loss announced in June.

"This is an extraordinary time for our industry, and one of the toughest periods in the firm's history," Lehman Chairman and CEO Richard Fuld Jr. said in a statement.

In last year's third quarter, Lehman reported a profit of $870 million, or $1.54 a share.

Analysts were expecting the firm to report a $1.99 billion loss, or $3.35 a share, according to Thomson Reuters. The company had originally planned to release its results on Sept. 18.

Shares of Lehman gained nearly 12% in pre-market trading following the announcement.

The company's stock has plunged nearly 88% so far this year due to concerns about its ability to raise much needed capital.

A keystone of Lehman's restructuring plan included a drastic reduction in both its commercial and residential real estate holdings. Lehman said it would spin off the majority of the company's commercial real estate assets into a new separate public company dubbed Real Estate Investments Global.

The company trimmed its residential real estate holdings by nearly a half. Part of that included the planned sale of about $4 billion worth of U.K. residential real estate. Lehman said it was working with asset manager BlackRock (BLK, Fortune 500) on the sale and expected it to be completed in the coming weeks.

Lehman also announced its intention to sell a majority interest in its investment management division, which includes the profitable money manager Neuberger Berman. The firm is in advanced discussions with a number of potential partners for its investment management division and said it expected to announce details of the deal "in due course."

Also, in an effort to save $450 million, Lehman said it planned to reduce its annual dividend to 5 cents per share from 68 cents.

"The strategic initiatives we have announced today reflect our determination to fundamentally reposition Lehman Brothers by dramatically reducing balance sheet risk, reinforcing our focus on our client-facing businesses and returning the Firm to profitability," Fuld said.

Lehman shares plummeted just a day earlier following a report by Dow Jones that indicated talks between Lehman and Korea Development Bank had ended. It had been widely speculated in recent weeks that the state-run KDB was interested in buying a stake in Lehman.

The stock fell even further Tuesday after credit ratings agency Standard & Poor's said it was placing Lehman on its CreditWatch list with negative implications, suggesting that S&P may cut its rating on Lehman's debt.

S&P analysts Scott Sprinzen and Tanya Azarchs wrote in a research note that they were concerned by "heightened uncertainty about Lehman's ability to raise additional capital, based on the precipitous decline in its share price in recent days."

Investors fear a Bear Stearns repeat
The fate of Lehman Brothers has been the subject of much market discussion in recent months following the near collapse of Bear Stearns, which was subsequently sold to JPMorgan Chase (JPM, Fortune 500) at a fire sale price.

Analysts have also been busy slashing third-quarter earnings estimates for Lehman, as well as Goldman Sachs (GS, Fortune 500) and Morgan Stanley (MS, Fortune 500), due to sluggish investment banking activity and weakness in stock markets around the globe.

But Lehman's problems have proven acute than its crosstown rivals. Hit hard by bad investments in the U.S. mortgage market, the investment bank has suffered billions of dollars in writedowns and has been forced to raise billion of dollars in capital.

In June, following the company's first loss, Lehman announced plans to raise $6 billion in capital by selling stock.

At that time, investors were not only questioning the company's accounting but speculating that Lehman may have to sell part or even all of itself to another financial firm.

Speculation about a break-up of Lehman persisted in the months that followed, as analysts bet that the company would shed its profitable Neuberger Berman money management unit to raise cash.

Other large global financial institutions have also been said to be eyeing an investment in the U.S. firm, including Tokyo Mitsubishi Bank as well as a group of investors led by the British bank HSBC (HBC), according to recent news reports.

Lehman chief Fuld has faced increasing pressure to take action amid all the uncertainty about the firm's future. So far this year, there have been a handful of casualties in Lehman's top executive ranks.

In June, CFO Erin Callan and Chief Operating Officer Joseph Gregory were replaced. Callan eventually left Lehman for a job at Credit Suisse while Gregory remained at Lehman in a different position.

and now here is the dows current standing as of 9:39am "wall st. time"
of the DOW: ^18.4

1,667 Posts
Discussion Starter #3

New York Fed Holds
Emergency Meeting
On Lehman's Future
September 13, 2008 12:17 a.m.

The Federal Reserve Bank of New York held an emergency meeting Friday night with top Wall Street executives to discuss the future of venerable firm Lehman Brothers Holdings Inc. and the parlous state of U.S. financial markets.

The meeting, which began at 6 p.m., was called by the New York Fed in an attempt to find a solution to the problems plaguing Lehman. The group, which consisted of the heads of most major financial institutions, is expected to meet throughout the weekend to see if it can agree on some way to rescue the ailing firm, according to a person familiar with the matter.

Getty Images
A man enters an annex office for Lehman Brothers in New York. The investment bank is currently searching Wall Street for a financial lifeline in order to survive.
Treasury Secretary Henry Paulson has made it clear to participants that no government bailout should be expected, this person said. Representatives of the banks plan to continue meeting to try and forestall a collapse of Lehman, which could hurt their firms and Wall Street in general.

In attendance from were government officials, including New York Fed President Timothy Geithner, Mr. Paulson and Securities and Exchange Commission Chairman Christopher Cox. The Wall Street executives included Morgan Stanley Chief Executive John Mack, Merrill Lynch Chief Executive John Thain, J.P. Morgan Chase CEO Jamie Dimon, Goldman Sachs Group CEO Lloyd Blankfein, Citigroup Inc. head Vikram Pandit and representatives from the Royal Bank of Scotland Group PLC and Bank of New York Mellon Corp., among others.

The meeting appeared similar to one a decade ago when the New York Fed pulled together top Wall Street executives to prevent the collapse of hedge fund Long-Term Capital Management.

One big issue: Most of the firms at the meeting have themselves been hit with big losses and may not have the excess capital to step in.

"Senior representatives of major financial institutions met at the Federal Reserve Bank of New York Friday evening to discuss recent market conditions," a spokesman for the New York Fed said. The SEC issued a similar statement.

The future of Lehman could open a new chapter in the government's handling of the financial crisis, which is sweeping up an increasing number of firms, including American International Group Inc. and Washington Mutual Inc.

If the meeting helps engineer a rescue for the firm that doesn't involve government funding, it would represent a new approach for the Bush administration and Mr. Paulson, who has in the past six months helped intervene to break up Bear Stearns Cos. and organize a government takeover of mortgage giants Fannie Mae and Freddie Mac.

As of late Friday, Mr. Paulson appeared unwilling to support a government-led bailout of Lehman, people familiar with the situation say. Mr. Paulson and Federal Reserve Chairman Ben Bernanke don't see a need to structure a Bear-like rescue. In part, that's because Lehman and other investment banks already have access to Fed borrowing facilities created after Bear's collapse. As of Wednesday, no investment banks had tapped the facilities since July.

Lehman's troubles have also been well-known for a while, giving market participants "time to prepare," according to those familiar with the government's thinking. The government, which took over Freddie Mac and Fannie Mae last weekend, could face a public backlash if it continues to prop up troubled financial institutions.

Because the 158-year-old Lehman does business with several other Wall Street firms, the damage from any failure there could have widespread effects. It was precisely that concern that prompted the U.S. in March to orchestrate the sale of Bear Stearns Cos. to J.P. Morgan and limit the bank's exposure to bad assets on Bear's books.

As of late Friday, Bank of America Corp. was seen as the likeliest buyer, but Lehman and its investment bankers also were meeting with other potential bidders, including Barclays PLC and HSBC PLC, both of the U.K. Other parties were looking only at pieces of Lehman, with Goldman Sachs Group Inc. interested in some of the securities firm's huge real-estate portfolio.

But suitors like Bank of America, worried about the risk of buying an ailing financial institution like Lehman, want the government to step in with a package similar to what was offered to J.P. Morgan when it bought Bear. Then, the federal government agreed to absorb as much as $29 billion in losses. In seeking a Lehman deal, Bank of America Chairman and Chief Executive Kenneth D. Lewis is likely to face a tough sell to investors if he doesn't secure some federal government backing.

The government's rescues of Bear, Fannie and Freddie have already been criticized from politicians on both sides of the aisle. Mr. Paulson is expected to face tough inquiries on Tuesday when he appears before the Senate Banking Committee to answer questions about the takeover of Fannie and Freddie.

While talks continued Friday, Lehman was working on dual tracks. On the one hand, executives were negotiating to find a buyer for the company. At the same time, the company was moving ahead on other business, with bids for a stake in the pre-announced auction for its investment management unit due Friday night. The firm is also still planning to release its fiscal third-quarter earnings on Thursday.

The Punisher
1,607 Posts
.....and to add to this from today.........

Emergency meeting held over Lehman's future
Investment bank in close contact with Treasury, Fed about how to proceed

Jin Lee / AP
Lehman's losses soared to almost $7 billion in the last two quarters alone, primarily because of wrong-way bets on mortgage securities and other risky investments
View related photos

Lehman Brothers Holdings Inc 3.65 -0.57 -13.51%

WASHINGTON - With the global financial system holding its collective breath, the U.S. government scrambled to help devise a rescue for Lehman Brothers and restore confidence in Wall Street and the American financial structure.

Deliberations resumed Saturday as leading Wall Street executives and top U.S. financial officials tried to find a buyer or financing for the nation's No. 4 investment bank and to stop the crisis of confidence spreading to other U.S. banks, brokerages, insurance companies and thrifts.

An official from the Federal Reserve Bank of New York said participants include Treasury Secretary Henry Paulson, Timothy Geithner, president of the Federal Reserve Bank of New York, and Securities and Exchange Commission Chairman Christopher Cox. The New York Fed official asked not to be named due to the sensitivity of the talks.

Story continues below ↓


Participants in Saturday's discussions at the offices of the New York Fed also include executives from Goldman Sachs, JPMorgan Chase, Morgan Stanley, Citigroup and Merrill Lynch. Representatives for Lehman Brothers were not present during the discussions.

Solution needed
They were meeting on the heels of an emergency session convened Friday night by Geithner — the Fed's point person on financial crises.

Federal Reserve Chairman Ben Bernanke is actively engaged in the deliberations but wasn't in attendance.

Paulson convened the meeting Friday evening, and told bankers gathered at the New York Fed's imposing building in downtown Manhattan to come up with a solution or risk being the next to go under, said investment banking officials with direct knowledge of the talks.

They discussed the current financial crisis, and were asked to come back Saturday with solutions that did not involve any financial intervention by the government, the officials said.

They spoke on condition of anonymity because the talks were ongoing.

Fed and Treasury officials are aiming for a private-sector rescue for the troubled firm. Options include selling Lehman outright or breaking it up into pieces to be sold to private firms.

Potential buyers could include Bank of America Corp., Britain's Barclay's Plc, Japan's Nomura Securities, France's BNP Paribas and Deutsche Bank AG. All have declined to comment.

Other problems on agenda
Participants in Saturday's meeting were also trying to tackle a broader agenda that includes problems at American International Group Inc. and Washington Mutual Inc., said the investment bank officials, who were briefed on the talks.

AIG, the world's largest insurer, and WaMu, the nation's biggest savings bank, have taken steep losses during the past year from risky investments. Investors, worried they do not have enough cash on their balance sheets to withstand further hits, unloaded their shares on Friday.

Complete story at the link.

Watchin tha world go by
8,151 Posts
no fed money coming --- leeman bankruptcy by midnight

the fed has said no to funding a buyout so the buyers are fleeing and speculation is that by midnight Leeman will declare bankpuptcy. so now WAMu has no hope of fed help and will probably suffer FDIC take over soon.
Merrill Lynch is the next on the list but the feds are pushing talks to acquire it, so i guess they dont have to. the dominoes are fallin.

buckle up DOW Jones
Sept. 14 (Bloomberg) -- Wall Street readied for a potential Lehman Brothers Holdings Inc. bankruptcy after Bank of America Corp. and Barclays Plc pulled out of talks to buy it and the government indicated it wouldn't provide funds to prevent a collapse.

Banks and brokers today held a session for netting derivatives transactions with Lehman, or canceling trades that offset each other, in case the New York-based firm files for bankruptcy before midnight.
WASHINGTON (Reuters) - Bank of America is no longer in the bidding for troubled investment bank Lehman Brothers, Bloomberg Television reported on Sunday, citing a person familiar with the negotiations.
The official also said the Treasury Department and the Fed are pushing Bank of America Corp. to buy Merrill Lynch & Co., though talks are still preliminary.

On Friday, Merrill Lynch's shares fell as investors fretted it might be the next investment bank to come under pressure from its portfolio of risky mortgage-backed securities.
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2,825 Posts
we heard of this tonight, waiting for the fallout. its coming. I know it is , just cant work out how yet. I do know that if you control the energy , you control the country and if you control the food you control the people.

watch your plates people and I dont mean your feet

Watchin tha world go by
8,151 Posts
be very interesting to see now that the news is out on your side of the pond how the asian markets and yours react ahead of the NYSE opening.

my gut feeling is not good

467 Posts
BOA also walked away from the deal.S&P and Dow futures are some of the lowest recorded! Gold and Silver are starting to climb back up.Alot of people are running for finanical saftey.I am going to pull all my money out of savings tomorrow it was not earning anything anyhoo......If banks close or there is a "holiday" declared cash will be king.

not a nut
1,629 Posts
Maybe the government is finally realizing that the bank aren't the only ones in deep doodoo. They themselves can no longer afford to bale out the misbehaving institutions.

How many bank failures does it take to collapse an economy???

My food preps are in order, I think tomorrow I will be out shopping for my first gun :upsidedown:

Watchin tha world go by
8,151 Posts
too late ta bail --- abandon ship weomen and children first

Watchin tha world go by
8,151 Posts
not all are closed --- and ones open are tanking in early trading
BTW Asian markets are closed tomorrow.
^AORD All Ordinaries 4,875.00 2:42AM ET Down 82.10 (1.66%) Components, Chart, More
^BSESN BSE 30 13,238.12 2:47AM ET Down 762.69 (5.45%) Chart, More
^JKSE Jakarta Composite 1,754.06 3:02AM ET Down 50.00 (2.77%) Components, Chart, More
^NZ50 NZSE 50 3,319.90 1:31AM ET Down 41.79 (1.24%) Components, Chart, More
^STI Straits Times 2,491.27 3:02AM ET Down 79.40 (3.09%) Components, Chart, More
^TWII Taiwan Weighted 6,052.45 1:46AM ET Down 258.23 (4.09%)
PARIS, Sept 15 (Reuters) - European equities were set to tumble in early
trade on Monday as Wall Street firm Lehman Brothers (LEH.N: Quote, Profile, Research, Stock Buzz) (LHMH.F: Quote, Profile, Research, Stock Buzz) filed for
bankruptcy protection, fuelling more fears over the battered financial sector.

Financial bookmakers expected Britain's FTSE 100 .FTSE to open 102 to 106
points lower, or as much as 2 percent, Germany's DAX .GDAXI to open 130 to 163
points lower, or as much as 2.6 percent, and France's CAC-40 .FCHI to be down
122 to 140 points, or as much as 3.2 percent.

"We're going to see major falls today. It's probably going to be one of the
worst days the financials have seen, with these three big stories all happening
at once," said Matt Buckland, dealer at CMC Markets.

117 Posts
Germany's markets are down about 3% seem to be hovering around this level with all eyes focused on the US open. Mood on trading floors is dim (the one I sit on, and the ones I heard from this morning)

Just a taste:
Allianz Insurance: Down 5.5%
Dt. Postbank: Down 5.2%
Deutsche Bank: Down 5%
Commerzbank: Down 4.9%
Hypo Real Estate: Down 4.9%

Those are just the banks, but losses are heavy all across the board. Think we will hit around 4-5% down in the DAX (Large Cap Index) by the time I shut the screens down tonight.

I will go with the Mrs. to see the OB/GYN now for the pregnancy check up - not worth sitting here anyways!

AKA The Dragon
2,818 Posts
This will hit the Australian financial stocks again.
The reaction of the Asian markets will impact our resource export boom and stocks.

Watchin tha world go by
8,151 Posts
they are beyond running scared -- they are panicked.
the big boys on both sides of the pond, and expect the european bank to announce their anteing up later, have put up 70B as well as additional fed loans to stabilize the markets and financial institutions worldwide it is no longer a single market they are worried about they are priming a worldwide pump, that has no liquid below it. they may be able to stave off reality for another year or so at best, but i am afraid they know they are at the end of their financial assistance rope. and this one last tug is close to all they have left. other than additional rate cuts in 4th qtr and deal with the inflationary results. this action they will take and the actions they have taken today will weaken the dollar drive oil up and contents of your wallet down.
"It's clear we're one step away from a financial meltdown," said Nouriel Roubini, chairman of the consulting firm RGE Monitor.

The meetings that began Friday night were a who's who of financial heavyweights: Treasury Secretary Hank Paulson, Timothy Geithner, president of the New York Fed, Securities and Exchange Commission Chairman Christopher Cox, and a host of CEOs, including Vikram Pandit of Citigroup Inc., Jamie Dimon of JPMorgan Chase & Co., John Mack of Morgan Stanley, Lloyd Blankfein of Goldman Sachs Group Inc., and Merrill Lynch & Co.'s John Thain.
And a global consortium of banks, working with government officials in New York, announced a $70 billion pool of funds to lend to troubled financial companies.

The aim, according to participants who spoke to The Associated Press, was to prevent a worldwide panic on stock and other financial exchanges.

Ten banks -- Bank of America, Barclays, Citibank, Credit Suisse, Deutsche Bank, Goldman Sachs, JP Morgan, Merrill Lynch, Morgan Stanley and UBS -- each agreed to provide $7 billion "to help enhance liquidity and mitigate the unprecedented volatility and other challenges affecting global equity and debt markets."

Christopher Whalen, managing director of Institutional Risk Analytics, a research firm, predicts that approximately 110 banks with $850 billion in assets could close by next July.

Lehman Brothers, burdened by $60 billion in soured real-estate holdings, said it is filing for Chapter 11 bankruptcy after attempts to rescue the 158-year-old firm failed.

Bank of America Corp. said it is snapping up Merrill Lynch & Co. Inc. in a $50 billion all-stock transaction.

The world's largest insurance company, American International Group Inc., also was forced into a restructuring.The Wall Street Journal and The New York Times both reported early Monday on their Web sites that the American International Group is seeking an additional $40 billion in emergency funds -- possibly from the Federal Reserve -- to help it avoid a credit rating downgrade, which would make it more expensive for AIG to raise money. The insurer has already raised $20 billion in fresh capital this year.

AIG was working with New York Insurance Superintendent Eric Dinallo and a representative of the governor's office through the weekend to craft a solution that protects policyholders, according to Dinallo's spokesman David Neustadt.

dont bother to buckle up--- its lifeboat time
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Premium Member
12,131 Posts
''one step away from a financial meltdown''?.......exactly what would Mr. Nuoriel Roubini call whats been happening the past eight months?.....restructuring?:rolleyes:............

117 Posts
I think 4% in the blue chips is definitely in the cards. DOW futures have done a bit of a rebound after hitting 400 down earlier - now "only" 350pts down. Europe has bounced back a bit in the last few minutes but we are still down 3.5% in the bluechips

Banks are getting reamed still - Germany's largest bank, Deutsche Bank was down 10% earlier - Commerzbank 13%
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