David Kirkpatrick

March 13, 2010

Want to get mad at the bank bailout all over again?

Filed under: Business — Tags: , , , , , — David Kirkpatrick @ 2:50 pm

Read this report on the shenanigans Lehman Brothers undertook to hide its precarious financial state. Recall the Lehman bankruptcy is what really freaked everyone out and even though it might not have been the actual cause of the bank bailouts, it was most likely the key trigger.

From the link:

It is the Wall Street equivalent of a coroner’s report — a 2,200-page document that lays out, in new and startling detail, how Lehman Brothers used accounting sleight of hand to conceal the bad investments that led to its undoing.

The report, compiled by an examiner for the bank, now bankrupt, hit Wall Street with a thud late Thursday. The 158-year-old company, it concluded, died from multiple causes. Among them were bad mortgage holdings and, less directly, demands by rivals like JPMorgan Chase and Citigroup, that the foundering bank post collateral against loans it desperately needed.

And:

According to the report, Lehman used what amounted to financial engineering to temporarily shuffle $50 billion of assets off its books in the months before its collapse in September 2008 to conceal its dependence on leverage, or borrowed money. Senior Lehman executives, as well as the bank’s accountants at Ernst & Young, were aware of the moves, according to Mr. Valukas, the chairman of the law firm Jenner & Block and a former federal prosecutor, who filed the report in connection with Lehman’s bankruptcy case.

Richard S. Fuld Jr., Lehman’s former chief executive, certified the misleading accounts, the report said.

September 25, 2009

Shortsighted CEOs

Filed under: Business — Tags: , , , , , , — David Kirkpatrick @ 4:30 pm

Or was it nearsighted? Or maybe just plain blind as bats. At any rate this is a humorous, and sad, collection of quotes from erstwhile kings of Wall Street.

From the link:

Richard Fuld, Lehman Brothers: “Our core franchise and our culture are strong. Our capital and liquidity positions have never been stronger.”—June 16, 2008, on a conference call with analysts

What happened next: With clients pulling their money from Lehman accounts, the firm ran short of cash. Fuld reportedly turned down a financing offer from Warren Buffett, perhaps because he thought a government bailout—like that of Bear Stearns—would come with better terms. But no bailout materialized, and Lehman filed for bankruptcy on Sept. 15, 2008.

December 30, 2008

The single biggest (quiet) story of 2008

Easily the bankruptcy of Lehman Brothers. Before and after this event the government threw money around like a drunk sailor on shore leave. If you had a hand out, the Fed put a cool billion right there in your sweaty palm.

Lehman? Left rolling in their own excrement and costing creditors something around $200B.

The way this entire financial meltdown has been handled is criminal. Just one more black mark on the legacy of the failed Bush 43 regime.

From the link:

Lehman Brothers Holdings Inc’s emergency bankruptcy filing wiped out as much as $75 billion of potential value for creditors, The Wall Street Journal reported on Monday, citing an analysis by the bank’s restructuring advisers.

A more planned and orderly filing would have allowed Lehman to sell some assets outside of bankruptcy court protection and would have given it time to unwind derivatives positions, according to the analysis by Alvarez & Marsal.

The Journal said it was too early to say how much money Lehman creditors would recover; it said unsecured creditors have asserted they are owed $200 billion.

Lehman filed for bankruptcy protection in September after the U.S. government declined to bail it out and a frantic weekend of negotiations to save the investment bank failed.

September 15, 2008

Big bank bust up

Wow. Merrill Lynch agrees to be sold to Bank of America and Lehman Brothers files for bankruptcy. The piper is being paid in spades.

From the link:

In one of the most dramatic days in Wall Street’s history, Merrill Lynch agreed to sell itself on Sunday to Bank of America for roughly $50 billion to avert a deepening financial crisis, while another prominent securities firm, Lehman Brothers, filed for bankruptcy protection and hurtled toward liquidation after it failed to find a buyer.

The humbling moves, which reshape the landscape of American finance, mark the latest chapter in a tumultuous year in which once-proud financial institutions have been brought to their knees as a result of hundreds of billions of dollars in losses because of bad mortgage finance and real estate investments.

September 10, 2008

Lehman Brothers posts almost $4B Q3 loss

Filed under: Business — Tags: , , , — David Kirkpatrick @ 11:54 pm

It’s a record for the firm since going public.

From the link:

Lehman Brothers suffered its worst quarterly loss since going public, reporting a loss of nearly $4 billion Wednesday, and announced a series of drastic steps aimed at reviving the beleaguered firm.

Among those changes were plans by the firm to 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 Lehman (LEH, Fortune 500) shares plunged 45% to their lowest levels in nearly a decade, the investment bank said it lost $3.9 billion during the fiscal third-quarter, or $5.92 a share.

The results, which were released more than a week in advance to help quell fears about the firm’s underlying health, were the company’s second consecutive loss and exceeded Lehman’s $2.8 billion second-quarter loss announced in June.

Lehman Chairman and CEO Richard Fuld Jr. described the quarter as “one of the toughest periods” in the 158-year old firm’s history.