Lehman Brothers Close To Collapse - US Chapter 11 insolvency procedures starting

American Bank Close To Collapse

news.sky.com

Britain's third-largest bank had appeared to be the frontrunner to take over Lehman Brothers but has pulled out of the bidding, according a Barclays source close to the deal.

The person, who spoke on condition of anonymity, said the decsion was "very unlikely" to change because Lehman did not meet Barclays' "stringent requirements".

US government officials and top Wall Street bankers are desperately trying to sell Lehman and avert a collapse that could severely disrupt global markets.

(visit the link for the full news article)



[edit on 14-9-2008 by infinite]

[edit on 14-9-2008 by infinite]

Without protection, Barclays said the deal would have been crazy and dangerous.

US government officials may turn their attention to the Chinese and Koreans, but it is unlikely they will come to the rescue if Barclays rejected a purchase. Nationalisation has been ruled out too.

It is rumoured a deal must be done before the opening of the Asian markets because officials fears a collapse could trigger another Black Monday.

news.sky.com
(visit the link for the full news article)

I think we should let it collapse, we should have let Bear Stearns collapse...Fannie and Freddie kind of a different story, since they hold SO many U.S. home mortgages...but imo we should have split them into different companies so that if one sector fails it doesn't disrupt the mortgage market as severely, as it stands they have a monopoly on mortgages. The crash of 1987 was the bottom of the stock market...may as well just rip the bandaid.

[edit on 14-9-2008 by yellowcard]

Chapter 11 is about to be issued;

Preparations made for Lehman Brothers to get insolvency protection, the BBC learns.

Preparations have been made for Lehman Brothers, the substantial US investment bank, to obtain protection from its creditors under US Chapter 11 insolvency procedures.

I have also learned that PWC, the leading accountancy firm, has been lined up to run the UK operations of Lehman in the event that it is put into administration under our insolvency arrangements.

BBC Business editor

Emergency trading has been allowed on Wall Street for Lehman Brothers to midnight. Brokers Sunday on afternoon were streaming into their offices and a special trading session for credit default swaps was called.

CNBC

Also, more worrying, most stock exchanges are preparing computer systems encase of a market crash. Yes, Wall Street is fearing the worse.

I've been watching this closely the last few days and I think this could be the unraveling of the entire US economy. I'm not sure how effective this special trading session will be at saving the other investment firms, because surely they'll be selling everything they've got at firesale prices and you can bet every financial stock will be halved in value when the market opens tomorrow morning.

This is freaking unbelievable!



What a mess!

What's with the special trading? I didn't know they could do that. Is that for institutional investors only? What about the individual guys?


[edit on 14-9-2008 by loam]

reply to post by mythatsabigprobe


Exactly. Special trading translate into Wall Street fear - which isn't good for the market. Apparently, Bank of America and Merrill Lynch are in a discussion over a possible merger. After, Merrill has the same problems as Lehman.

The investment firms will be currently in the middle of a fire sale - that's why the session was called. Wall Street hopes to get most of the poison out tonight, but fears the Asian and European markets will see massive sell off's.

Originally posted by loam
This is freaking unbelievable!

What a mess!

What's with the special trading? I didn't know they could do that. Is that for institutional investors only? What about the individual guys?

It is for those firms who are linked to Lehman. The session closes at 12:01am. Expect small and medium banks tomorrow to finish trading with a worthless share price.

[edit]

Central banks have been told to liquidate anything in the reserve that is linked to Lehman as well.

[edit on 14-9-2008 by infinite]

at:
www.telegraph.co.uk.../money/2008/09/08/cnlehman108.xml

we find out that the Lehman Exec. Mr. Jeremy Issacs, in charge of European Operations, decided to 'step down' on 07-09-08
(several days before the Lehman operation looks to be self destructed)
?what's his severence?

then [there is a link on the same page], we hear that Barclay's, China & Korea among others, are also a keeping 'hands off' policy...(dtd 14-09-08)...
mainly because Lehmans bad paper and assets will not be guaranteed to be 'bought' or 'swapped' for US Treasuries...
like the Federal Reserve or the US Treasury has done for many other banks & financial institutions.
I Say.... ~good thinking & reasoning Barclays~
don't get into the mess!

Very important post! Looks like everything is snowballing quickly now.

Would it be alright to move this post to the "Global Meltdown" forum so interested members will see it tonight or tomorrow? Otherwise, there will be five threads about it, it's such big news.

If there is no resolution to Lehman the consequences would be catastrophic.

www.cnbc.com...

www.larouchepac.com...

After the initial impact, quite literally anything could happen. The complete systemic collapse of the US economic system could possibly be hours away. This is what so many have been warning against. The beginning of what people on this forum and other forums have been warning about for months/years.

WAKE UP AMERICA!!??

Well the sleeping masses are going to be. Only hours remain to stop the first domino from falling.

I notice it's a little different from last weekend when they just snatched Freddie and Fanny and basically told the common and preferred stockholders they were poop out of luck. When you're one of their own, they'll bend over backwards to protect your money...

[edit on 9/14/2008 by mythatsabigprobe]

My question will be, Is America going to bail them out?

One of the reasons that Lehman Brothers has not been able to find buyers is because the potential buyers are looking to the Fed to see if the will guarantee at least some help.

This people were in trouble since 2007, when the credit crisis started, as the housing bubble crashed they just got deeper and deeper in trouble, because the housing market was so attractive when it was booming and they just like many other financial institutions got their hand on the cookie jar now they got their greedy hands stuck.

I wonder why they waited so long to try to sell the company.

The Fed may bail them out and it could happen in the next two hours (that's the deadline.) But I seriously cannot see it.

Bank of America and a coalition of partners have pulled out now as well.

From what I've read, the only way to save Lehman is for a massive injection of taxpayer funds. Not sure if it will happen this time - I don't really understand anything with regards to these finance companies, but it seems to me that the people that caused these problems need to be held accountable. If taxpayers bail out another bank, it just reinforces the bad behaviour of the past few years and lets the big end of town sleep peacefully in the knowledge that hard working Americans will protect their privileged lifestyles with tax money even if they've behaved unethically and illegally. The crazy thing about all of this that many of the executives of these banks will still get millions of dollars if their banks do badly...

Because it is not a commercial bank, and the average Joe will not lose cash, it might be allowed to fail. After all, the Fed cannot bail everyone out - the United States does not have the money.

Interestingly, I have been told, that many foreigner investors are taking out insurance on US investments encase of a US default.

Originally posted by yellowcard
I think we should let it collapse, we should have let Bear Stearns collapse...Fannie and Freddie kind of a different story, since they hold SO many U.S. home mortgages...but imo we should have split them into different companies so that if one sector fails it doesn't disrupt the mortgage market as severely, as it stands they have a monopoly on mortgages. The crash of 1987 was the bottom of the stock market...may as well just rip the bandaid.

[edit on 14-9-2008 by yellowcard]

Star for you my friend. This has to end period. This idea of nationalization and socialization is disgusting and the most un-american crap I have seen since ... well... the patriot act. In a free market these companies need to be allowed to fail. This especially knowing the Lehman is under investigation for tax fraud. So they dont want to pay their taxes but they want the taxpayer to bail them out. Disgusting.

A delicious analysis:

theautomaticearth.blogspot.com...

Everyone is trying to figure out, with their teams of lawyers and accountants, what it would mean if Lehman goes down and files for bankruptcy protection. Few of the market makers have counted on that happening, at least not in this -early- stage of the Unwind game.

They are supposed to work together to find a solution, but while they talk their thoughts wander inexorably towards the survival of their own firms and jobs and shares and homes and yachts and lifestyles and choir boys and mistresses and reputations. Not an ideal environment to do big business in.

Nobody really wants Lehman. An early proposal to split off a "bad bank" branch containing $85 billion in "souring" assets, including $30 billion in commercial real estate silly paper, had the effect of a category 12 hurricane warning: women and children first.

They all know that if that's what's known, there's more to come: they only need to look at their own -hidden- books. That's exactly why they refuse to lend to each other, after all.

Originally posted by infinite
The Fed may bail them out and it could happen in the next two hours (that's the deadline.) But I seriously cannot see it.

Bank of America and a coalition of partners have pulled out now as well.

Right, if they are allowing special trading that means there is no bailout coming and there shouldnt be. Looks like I get to buy some stocks on sale tomorrow.