This time last year I was an equity analyst at Lehman Brothers. As the firm collapsed, I sent a series of notes to my friends and family with my take on the situation. To coincide with the anniversary, I have been publishing those observations here one year later. [Photo: Lehman stock hits 25 cents]
A White Knight?
Originally written Monday September 15th, 2008,10:30pm
The Wall Street Journal is reporting that a deal for Barclay's to buy most of Lehman's US operations could be announced shortly. The deal would preserve a lot of jobs, help New York City, and throw the rest of Lehman proper (including overseas operations) into immediate liquidation.The question of what to do with the $85 billion of toxic mortgage assets would still loom, but I think the Fed's new rules allowing banks to put up a wider set of assets as collateral to ensure overnight liquidity could conceivably do the trick and would be unlikely to be played in the press as a "bailout of Lehman by the Feds." It will be more like "Brits to the rescue. Elegant solution to a lot of problems and it saves face for the Feds.Still unclear how "real" this is or whether it would be approved by the judge in charge of the chapter 11 filings. For Barclay's, it’s a huge bargain if they contain the mortgage risk to acceptable levels. It means that the top people at Lehman who've been negotiating up until this point are history, I assume. Stay tuned