JULY 27, 2016 12:59 PM EDT By Barry Ritholtz;
"An old meme in new clothing has been circulating recently: The Federal Reserve could have and should have saved Lehman Brothers. It had the resources, the legal authority and the obligation to do so; its failure to act let a modest financial fire become a full-blown credit crisis.
...Let’s dispose of the first issue: That the Fed could have rescued Lehman Brothers, since a collapse would be an existential threat to the banking and financial systems, and withholding a bailout was likely to precipitate a much greater crisis. That’s not my belief, but it was the argument for a bailout in 2008, and ever since.
As subsequent events have shown, most especially with the Fed-led bailout of insurance giant American International Group, if there was a will, there most certainly was a way...
...But the proof of Lehman’s insolvency is found in its notorious accounting deception, Repo 105. Each quarter, Chief Executive Officer Dick Fuld and his team of accountants at Lehman managed to move about $50 billion in liabilities off of Lehman’s books just in time for the quarterly earnings report...
Hiding $50 billion dollars or more of liabilities each quarter is evidence of capital inadequacy or excessive leverage, if not outright insolvency...
Lehman’s accounting was especially opaque, even relative to other investment banks (and that’s saying something!), making it difficult for any suitor to throw Lehman a lifeline, especially on such short notice.
But there was one white knight who could have saved Lehman: Warren Buffett, chairman of Berkshire Hathaway...
According to Bloomberg, Berkshire Hathaway offered to buy preferred shares that would pay a dividend of 9 percent and could be converted to common at the then- market price of $40.30.
...Lehman was the first trailer in the park to be destroyed by the tornado.
Whether it lived or died was not going to stop the financial forces that had been decades in the making and unleashed when the credit bubble popped.
I agree with Ann Rutledge, a principal with New York-based R&R Consulting, and co-author of two books on structured finance. She noted “It wasn’t a mistake to let Lehman fail, it was a mistake to let it live so long.”
Maybe now this exercise can be put to rest once and for all.
http://www.bloomberg.com/view/articles/2016-07-27/let-s-put-the-lehman-bailout-debate-to-rest
"An old meme in new clothing has been circulating recently: The Federal Reserve could have and should have saved Lehman Brothers. It had the resources, the legal authority and the obligation to do so; its failure to act let a modest financial fire become a full-blown credit crisis.
...Let’s dispose of the first issue: That the Fed could have rescued Lehman Brothers, since a collapse would be an existential threat to the banking and financial systems, and withholding a bailout was likely to precipitate a much greater crisis. That’s not my belief, but it was the argument for a bailout in 2008, and ever since.
By knowingly ignoring the crimes committed by his colleagues,
and the unreported trillions handed out by the Fed which they traded on
without the public's knowledge,
Barry is for everyone else subsidizing his profession
by Bloomberg, which reported the story a few times,
without consequence to those who traded on insider information
and committed securities fraud, for the benefit of the industry he's writing about
As subsequent events have shown, most especially with the Fed-led bailout of insurance giant American International Group, if there was a will, there most certainly was a way...
...But the proof of Lehman’s insolvency is found in its notorious accounting deception, Repo 105. Each quarter, Chief Executive Officer Dick Fuld and his team of accountants at Lehman managed to move about $50 billion in liabilities off of Lehman’s books just in time for the quarterly earnings report...
Anybody go to jail for Repo 105 Barry?
Who did it and didn't go to jail?
Fuck you Barry for standing by and letting them get away with it
Hiding $50 billion dollars or more of liabilities each quarter is evidence of capital inadequacy or excessive leverage, if not outright insolvency...
Without consequence, meaning Barry was okay with it being stupid,
but not illegal
Lehman’s accounting was especially opaque, even relative to other investment banks (and that’s saying something!), making it difficult for any suitor to throw Lehman a lifeline, especially on such short notice.
Which means lots of banks etc... committed securites fraud,
and Barry Ritholtz won't say so, so he can keep his job
But there was one white knight who could have saved Lehman: Warren Buffett, chairman of Berkshire Hathaway...
According to Bloomberg, Berkshire Hathaway offered to buy preferred shares that would pay a dividend of 9 percent and could be converted to common at the then- market price of $40.30.
Did Warren Buffett know about the TAF etc... credit lines Barry?
Did it ever occur to you to ask?
No, that's because you are part of the problem,
acting out the establishment's devil's advocate with subtle propaganda
Why didn't the other trailers of shit go as well Barry?
Glad they are still together?
Do you get paying gigs for speaking to wire houses etc...?
Whether it lived or died was not going to stop the financial forces that had been decades in the making and unleashed when the credit bubble popped.
Which didn't fix anything that was wrong,
with your help Barry
I agree with Ann Rutledge, a principal with New York-based R&R Consulting, and co-author of two books on structured finance. She noted “It wasn’t a mistake to let Lehman fail, it was a mistake to let it live so long.”
Maybe now this exercise can be put to rest once and for all.
http://www.bloomberg.com/view/articles/2016-07-27/let-s-put-the-lehman-bailout-debate-to-rest
Fuck you very much, Barry Ritholtz
