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
Lehman Brothers
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)
Fed Sets Deadline For CDS Regulation Proposals ·
The Federal Reserve has reportedly given CME Group, Intercontinental Exchange, and other futures exchanges until October 31st to detail proposals for reducing risk in the $55 trillion credit default swaps market. (Bloomberg)
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)
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)
Santander Clients Hit By Lehman Collapse ·
Santander, Spain’s largest bank, said Friday it will compensate clients who lost roughly $507 million on bonds issued by failed U.S. investment bank Lehman Brothers. Banks in Hong Kong, Singapore and Italy have also agreed to buy Lehman securities after protests from investors. (FT)
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)
CDS Postions On Lehman Settled “Without Incident” ·
The Depository Trust & Clearing Corporation, which tracks derivatives contracts, reported that hundreds of bets placed on Lehman Brothers' creditworthiness were settled "without incident" this week, noting that only $5.2 billion had to change hands for all traders to close out their positions. (NYT)
Paulson: “We Didn’t Have The Powers” To Save Lehman [INTERVIEW] ·
U.S. Treasury Secretary Henry Paulson said in an interview that after personal pleas for other firms to buy Lehman Brothers failed, the Federal Reserve ultimately could not bail out the investment bank because it lacked good assets to serve as collateral. (NYT)
Lehman: “A Very Lucky Mistake” [Opinion] ·
Hugo Dixon and Dwight Cass of BreakingViews.com speculate that a government bailout of Lehman Brothers would have only delayed the credit crisis by a month, and quite possibly could have led to a far more debilitating series of minibanking crises. (NYT)
Germany Probes KfW Over Lehman Transfer ·
Management at KfW Group, a German government-owned development bank, is under investigation by prosecutors probing a $411 million automated payment the bank made to Lehman Brothers the day it filed for bankruptcy protection. (Bloomberg)
Feds Subpoena Wall Street Analysts About Lehman Calls ·
Prosecutors have reportedly subpoenaed analysts at other Wall Street firms, seeking information about whether they were misled by Lehman Brothers about its financial health. A week before its bankruptcy, Lehman assured analysts on a conference call it needed no new capital, despite calculations of a $3 billion shortfall. (WSJ)
Financial Sector Campaign Donors Skirt Restrictions ·
Campaign finance laws have been stretched, as campaign contributors gave tens of thousands of dollars to "joint" fund-raising committees that benefit both a candidate and their respective parties. (NYT)
Euro Libor Rates Ease To Pre-Lehman Levels ·
Euro libor, the rate banks charge for three month Euro loans, fell to 4.96% on Tuesday, its lowest level since Lehman Brothers collapsed on September 15th. The overnight dollar rate also slid to 1.28%, below the Federal Reserve's target for the first time since October 3rd. (Bloomberg)
Markets Brace For Lehman CDS Payouts ·
The Depository Trust and Clearing Corp. estimates that protection sellers will have to deliver just $6 billion in payouts for $72 billion in credit default swap insurance on Lehman Brothers' debt. However, other analysts estimate the payout could range from $100 billion to $600 billion. (Financial Week)