2005 Bankruptcy Law Doomed Wall Street ·
Analysts contend Wall Street sealed its demise by backing a 2005 bankruptcy code that in retrospect removed legal obstacles for counterparties - including hedge funds- to unwind derivatives trades and demand extra collateral from faltering institutions like Bear Stearns and Lehman Brothers. (FT)
October 31, 2008
Bankruptcy
E. Greenberg: Insurers Don’t Need Subsidies [OPINION] ·
Evan Greenberg, CEO of ACE Limited and chairman of the American Insurance Association, protests that U.S. insurers should not have to partake in the U.S. Treasury's Capital Purchase Program because they have yet to show they pose a systemic risk to the financial system. (WSJ)
“Incontrovertible Evidence” Of A Securities Earthquake [INTERVIEW] ·
Economist Roger Kubarych and author Richard Whalen discuss the warning signs missed (and dismissed) by Wall Street and Washington in the months leading to the credit crisis, beginning with the February 2007 collapse of New Century Financial. (Institutional Risk Analytics)
Cost To Liquidate Lehman Swells [ANALYSIS] ·
Analysts predict Lehman Brothers' bankruptcy will be the most expensive ever, besting the record set by Enron in 2004, as the cost for administrators, accountants and lawyers swells to more than $1.6 billion. Law firm Weil Gotshal & Manges, Lehman's adviser, could bank $209 million in fees alone. (Bloomberg)
AIG Taps Fed Facility To Repay U.S. Loan ·
American International Group repaid $6.8 billion of a $123 billion U.S. government credit line by borrowing from the Federal Reserve's commercial paper facility on Thursday. (Reuters)
Insurers May Tap Treasury For Remaining $90B ·
U.S. insurers are reportedly in talks to tap the remaining $90 billion of the U.S. Treasury's $250 billion bank recapitalization program. The American Council of Life Insurers confirmed that officials are exploring how to fit some insurers into the program without stigmatizing them. (Bloomberg, WSJ)
Credit Suisse Benefits From Lehman Collapse ·
Credit Suisse reportedly added $101 billion in assets to its prime brokerage unit during the third-quarter as hedge fund clients shifted assets from Lehman Brothers following its September 15th bankruptcy. (WSJ)
Treasury Closes Door For U.S., U.K. Insurers ·
The U.S. Treasury has reportedly signaled to American and British insurance companies that they will not have access to emergency funds through the government's $700 billion bailout program, emphasizing monies are reserved for "federally regulated financial institutions that lend money." (The Times)
Counterparty Delays Slow Lehman Unwinding ·
Pricewaterhouse Coopers conceded Sunday that the unwinding of Lehman Brother's European operations is not progressing as planned because slow co-operation from the collapsed investment bank's counterparties has made it difficult to track down client assets. (FT)
Citadel’s Griffin Denies Liquidation Rumors ·
Kenneth Griffin, head of the $18 billion hedge fund Citadel Investment, discredited rumors late Friday his firm sought a cash injection from the U.S. government to avoid a collapse. Griffin said the firm has $8 billion in available credit. (Reuters)
FDIC Shutters Alpha Bank, 16th Failure In 2008 ·
The Federal Deposit Insurance Corp. shut down George-based Alpha Bank late Friday after it succumbed to bad residential construction and land development loans. The FDIC said Minnesota-based Stearns Bank will step in to take over Alpha's $346 mllion in deposits. (Atlanta Business Chronicle)
Fed’s Bear Stearns Portfolio Loses $2B ·
The Federal Reserve disclosed that the value of the assets it took from Bear Stearns in March lost more than $2 billion during the third quarter, fueling concern that the central bank's rescue will end up costing taxpayers. The total portfolio value declined to $26.8 billion. (American Banker)
WaMu Auction Prices Swaps At 57 Cents ·
An auction held Thursday among dealers valued Washington Mutual's senior bonds at $0.57 cents, below the initial price estimate of $0.66. Sellers of credit-default swaps, or insurance, against the bankrupt U.S. thrift will now have to pay 43 cents on the dollar to bond investors. (CNBC)
AIG’s Liddy Says U.S. Loan “May Not Be Enough” ·
American International Group's CEO Edward Liddy said late Wednesday that the $123 billion loan extended to the insurer by the U.S. government "may not be enough" if capital markets continue to decline and force the company to post more collateral. (Bloomberg)
Commercial Paper Market Slumps For Sixth-Straight Week ·
The Federal Reserve reported Thursday that commercial paper outstanding contracted by $61.5 billion, or 4.1%, in the past week to a seasonally adjusted $1.45 trillion as investors remained anxious about lending to businesses. Total commercial paper outstanding has dropped by $366.7 billion since Lehman Brothers' September 15th bankruptcy. (CNNMoney)
