Investment bank Lehman Brothers filed for bankruptcy

#1
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WA_Vol

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#1
NEW YORK (Reuters) - Global markets plummeted on Monday after investment bank Lehman Brothers filed for bankruptcy protection, rival Merrill Lynch agreed to be taken over and the Federal Reserve threw a life line to the battered financial industry.

The events signal a seismic shift in Wall Street's power structure with big name investment banks biting the dust and major banks like Bank of America and JPMorgan Chase becoming the survivors.

"It's a return to pure capitalism, the survival of the fittest -- the government can't and won't bail everybody out," said Justin Urquhart Stewart, investment director at 7 Investment Management in London.
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Markets in turmoil by Lehman failure and Merrill sale | Reuters
 
#2
#2
tough few months for our staid, old wirehouses. These guys had reasonable outs and will continue forward, but bullheadedness absolutely creamed the company's equity holders. They might line up to choke Fuld.
 
#3
#3
BigPapaVol said:
tough few months for our staid, old wirehouses. These guys had reasonable outs and will continue forward, but bullheadedness absolutely creamed the company's equity holders. They might line up to choke Fuld.
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Yeah, it is fairly evident that Fuld had multiple opportunities to avoid this disaster, but overestimated the value of his bank... or underestimated the effect of the mortgage market tanking.
 
#5
#5
oklavol said:
Biggest Bankruptcy ever

Lehman Lists Debts Of $613 Billion In Chapter 11 Filing Monday
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that's just news sensationalism. While it is a large pile of liabilities, for anyone to pretend that all will be liquidated or heavily restructured is absurd.

Did you notice the large pile of assets as well?

Bottom line is that someone with equity is going walk in a take both sides of the balance sheet for nearly nothing, cream all the current equity holders and move on with a much stronger organization. Some debt holders clearly have some risk, but not what's implied.

A much more concerning problem is the disaster that the auto manufacturers have become. Those are going to be enormous bankruptcies and the ongoing operations, unlike Lehman, are losers. There is no intrinsic value, so those debt holders are going to get shelled.
 
#7
#7
I think Obama should walk in, take the companies making killer profits(you know oil) and distribute their profits to the companies that are struggling.
 
#9
#9
allvol123 said:
I think Obama should walk in, take the companies making killer profits(you know oil) and distribute their profits to the companies that are struggling.
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what do think they're doing now? i'm sure hussein obama will do much more. if he's elected more companies will be taken over by the government. socialism here we come.
 
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