Posts Tagged ‘Lehman Bros’
Posted by Larry Doyle on March 22nd, 2010 1:53 PM |
Is our nation trending away from the principles of capitalism which built the foundation upon which we rest? Another healthcare whine? Nope. I am talking about the once proud pillars of capitalism centered on lower Manhattan, otherwise known as Wall Street.
Let me simplify the debate. What is capitalism? Are you willing to accept the definitions provided by my Investing primer, Investopedia?
What Does Capitalism Mean?
An economic system based on a free market, open competition, profit motive and private ownership of the means of production. Capitalism encourages private investment and business, compared to a government-controlled economy. Investors in these private companies (i.e. shareholders) also own the firms and are known as capitalists.
What does the Financial Times have to say about our financial system this morning? (more…)
Tags: banking fees, Bear Stearns, capitalism, competition in banking, conflicts of interest, Few Banks, Financial Times Fat Fees, Goldman Sachs, it is what it is, it isn't what it isn't, lack of financial competition, Lehman Bros, oligopoly, principles of capitalism, tenets of capitalism, UK Office of Fair Trading, Wall Street, what is capitalism
Posted in General, Wall Street | 6 Comments »
Posted by Larry Doyle on March 13th, 2010 2:34 PM |
Given the global interest in this story, I am bumping it up from the original posting on 3/12/2010. LD
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Former Lehman Bros. CEO, Dick Fuld
Reports that Lehman was effectively ‘cooking its books’ prior to its ultimate demise are not a surprise.
Reports that Dick Fuld, then CEO of Lehman, was not aware of the nature of this cooking are both ridiculous and pathetic.
The lifeblood of every financial institution on Wall Street is access to financing for its operations. That financing very often comes in the form of repurchase agreements (repo financing), in which the institution borrows funds while pledging assets. These short term loans, often overnight loans, are unwound at a preset date and preset prices. The rates borrowers have to pay for funds borrowed depend on the credit quality of the borrower itself and the quality of the assets pledged. (more…)
Tags: Amerivet Securities v FINRA, Anton Valukas, Bart McDade, Dick Fuld, Dick Fuld's career, FINRA, Fuld 'Negligent' as Lehman Hid Leverage, Herbert 'Bart' McDade, Lehman Bros, Lehman Bros. balance sheet, Lehman cooking its books, Lehman manipulated its books, Lehman's auditors Ernst and Young, Lehman's financials, Lehman's leverage, NASD, off balance sheet transactions, Repo 105, repo financing
Posted in General, Lehman | 13 Comments »
Posted by Larry Doyle on March 11th, 2010 2:08 PM |
…shame on you, fool me twice, shame on me!!!
There are a handful of financial journalists who pull no punches in telling the absolute truth and in providing real transparency. Bloomberg’s Jonathan Weil holds a special spot in the Sense on Cents Hall of Fame for his determination in calling people and institutions on the carpet. From Wall Street to Washington to around the global financial landscape, Weil leaves no stone unturned in promoting integrity. His commentary today is superb. Please share it with friends. Weil writes, Greece Lifts a Page From Citigroup’s Playbook:
Is it too much to ask for the world’s titans of government and finance to speak credibly when they open their mouths? (more…)
Tags: Ambac Financial, balance sheets, Bear Stearns, Ben Bernanke, cds in europe, credit default swaps in europe, Dick Fuld, Fannie Mae, financial regulatory reform, fool me once, Freddie Mac, GAO, George Papandreou, Greece, Greece Lifts a Page from Citigroup's Playbook, Hank Paulson, herb allison, jonathan Weil, Lehman Bros, rating agencies, SEC, Sense on Cents Hall of Fame, too big to fail, transparency, Treasury, Vikram Pandit
Posted in General | 2 Comments »
Posted by Larry Doyle on February 4th, 2010 11:40 AM |
Are the wagons circling around Mary Schapiro and her former FINRA colleagues?
Regular readers of Sense on Cents are familiar with the issues and concerns I have raised repeatedly with Wall Street’s self-regulator, FINRA. I continue to believe the issues embedded within this self-regulatory organization lie near the heart of what I deem the Wall Street-Washington nexus.
Perhaps America will learn more about these issues soon. Why? Next week, FINRA’s Board of Directors will address alleged wrongdoings by Ms. Schapiro et al. What are the issues? (more…)
Tags: Allen Stanford, Amerivet Securities, ARS, Attorney Richard Greenfield, Bear Stearns, Bernie Madoff, David Kotz, Elton Johnson, FINRA, FINRA auction-rate securities scandal, FINRA Board of Directors, FINRA books and records, Harry Markopolos, investigation of Mary Schapiro, investment losses at FINRA, Lehman Bros, losses at FINRA, Mary Schapiro, Mary Schapiro's compensation, Mary Schapiro's tenure at FINRA, Merrill LYnch, need for transparency, Richard Greenfield, subprime, transparency, wagons circling Mary Schapiro, Wall Street Washington show, Wall Street-Washington incest
Posted in General | 8 Comments »
Posted by Larry Doyle on March 16th, 2009 10:37 AM |
It was one year ago that the Federal Reserve and Treasury delivered Bear Stearns into the hands of JP Morgan for $2 a share. Bear Stearns stock had traded above $170 a share in 2006. With the passage of time, what are some of the lessons learned and what questions remain unanswered.
1. Although Bear Stearns employees and shareholders may not qualify a price of $2 a share (revised to $10 a few weeks later) as being saved, would the financial system have been better off letting Bear totally fail? Why? If Bear had failed, many people do not believe we would have had the breakdowns in our financial systems that occurred because of Lehman’s failure.
2. Did Dick Fuld, CEO of Lehman, assume that the Fed and Treasury would save Lehman much as they did Bear? Was he less aggressive in pursuing increased capital injections during the Summer 2008 as a result? Many people believe this to be the case. (more…)
Tags: Ace greenberg, AIG, Bear Stearns, bear Stearns Asset Management, Dick Fuld, EMC Mortgage, Federal Reserve, Hank Paulson, Jamie Dimon, Jimmy Cayne, JP Morgan, Julius caesar, Lehman Bros, Matthew Tannin, Moral Hazard, Ralph Cioffi, Tim Geithner, Treasury, Wall Street Journal, Warren Spector
Posted in Jamie Dimon, JP Morgan, Risk, Wall Street | 2 Comments »
Posted by Larry Doyle on March 11th, 2009 5:45 AM |
For those involved in the markets, very often the first rate one checks in the morning is Libor (London Interbank Offered Rate). For those not directly involved in the markets, perhaps tomorrow morning or Thursday you may start your day by asking your partner, “where’s Libor?” In all seriousness, the 1 month and 3 month Libor rates may very well be the most closely watched indicators of market health in the world.
As Libor is the rate at which banks can borrow from each other in the London market, the rate is an indication as to the availability of dollars and the confidence banks have in each other’s credit. Traditionally, Libor tracked the Federal Funds rate (the rate at which banks borrow from the Federal Reserve) very closely. However, on the heels of the failure of Lehman Bros. last September, the confidence banks and investors had in each other plummeted. The relationship between the Fed Funds rate and 3 month Libor blew out. The 3 month Libor rate went as high as 4.7% from just outside 1%. Recall that at that period there was concern about money market funds “breaking the buck” amongst a whole set of other issues. (more…)
Tags: confidence, counterparties, fed Funds rate, Lehman Bros, Libor, sovereign credit risk
Posted in Bank Failure, Credit Risk, Money Market Funds, Risk, Wall Street | No Comments »
Posted by Larry Doyle on March 5th, 2009 6:37 PM |
Some of my favorite movies are The Sting, Rocky, and Papillon. I could watch those films a few times a year and appreciate the plot, character development, and climax.
In that same vein, for newer readers here at Sense on Cents, I want to highlight a piece I wrote on November 12, 2008. I believe this piece is as clear cut an historical explanation as I have seen to highlight the background of the debacle on Wall Street which precipitated this economic disaster. I also find it interesting as to my comments about potential market reaction to an aggressive tax/spend program under President Obama and a Democratic Congress.
I hope you find this article informative and enlightening: (more…)
Tags: AIG, asset-backed market, Bank of America, Bear Stearns, Bernanke, capital, CDS, Centex, China, collateralized mortgage obligation, Countrywide, Fannie Mae, financial quants, Freddie Mac, Hedge Funds, JP Morgan, Lehman Bros, Merrill LYnch, National City Bank, originate to distribute, Paulson, Pulte Homes, rating agencies, Ryland, SEC, Sheila Bair, walll Street
Posted in American Consumers, Auto Industry, Bad Bank, Bailout, Bank of America, Banking Institutions, Barack Obama, Barney Frank, Ben Bernanke, Business, China, Christopher Dodd, Commerce, Congress, Wall Street | 5 Comments »
Posted by Larry Doyle on November 12th, 2008 12:15 PM |
Despite billions and now trillions of dollars in capital injections and equity investments made by our government, private equity, and sovereign wealth funds, our economic turmoil is a long way from being over. I do find it interesting that despite numerous Wall Street titans having indicated to us at different points over the last year that we were in the 7th inning of this fiasco, now a recurring theme is that we should not expect any real economic recovery until 2010. Actually, maybe we were in the 7th inning but it was the 7th inning of the first game of a 4 game series.
Well, if we want to figure out where and when we are moving forward, I think it would be beneficial to know from where and when we came.
For those over 50 years of age, perhaps you remember when mortgage money dried up. Perhaps you also recall the days of putting down 20% before you even thought of buying a home. In any event, the growth of the secondary mortgage market in the mid 1980s was a result of some very sharp financial minds on Wall St. who engineered a product called a Collateralized Mortgage Obligation (CMO). (more…)
Tags: ABS model on Wall Street, and distribute business model, Asset securitization on Wall Street, Aurora Mortgage, bankruptcy of Lehman, Bear Stearns, breakdown of rating agnecy models on Wall Street, business model on Wall Street, CMO business model on Wall Street, Countrywide, development of CBOs, development of CDS, development of CLOs, development of credit derivatives, EMC Mortgage, fannie Mae and Wall Street model, First Franklin, Freddie Mac and Wall Street model, Hedge Funds, history of Wall Street business model, junk mortgages, Lehman Bros, Maryann Hurley, Merrill LYnch, NINA loans, originate, originate and distribute, originate to distribute, originate to distribute model, originate to distribute modeli, origination and distribution business, origination business model on Wall Street, Paulson comments on Wall Street, rating agency models, securitize, securitizing loans, the Wall street model, underwriting of loans on Wall Street, volumes of asset securitizations, Wall Street, Wall Street business model, Wall Street engineering, Wall Street engineers, Wall Street finance, Wall Street model, Wall Street model is broken, Wall Street model won't soon be fixed, Wall Street operating model is broken, Wall Street quants, Wall Street securitization model, Wall Street securitization process, Wall Street trading
Posted in American Consumers, Banking Institutions, Current Affairs, Economy, Housing Crisis, Mortgage Crisis | 13 Comments »
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The Wall St. Model is Broken . . . and Won’t Soon be Fixed!!
Posted by Larry Doyle on November 12th, 2008 12:15 PM |
Despite billions and now trillions of dollars in capital injections and equity investments made by our government, private equity, and sovereign wealth funds, our economic turmoil is a long way from being over. I do find it interesting that despite numerous Wall Street titans having indicated to us at different points over the last year that we were in the 7th inning of this fiasco, now a recurring theme is that we should not expect any real economic recovery until 2010. Actually, maybe we were in the 7th inning but it was the 7th inning of the first game of a 4 game series.
Well, if we want to figure out where and when we are moving forward, I think it would be beneficial to know from where and when we came.
For those over 50 years of age, perhaps you remember when mortgage money dried up. Perhaps you also recall the days of putting down 20% before you even thought of buying a home. In any event, the growth of the secondary mortgage market in the mid 1980s was a result of some very sharp financial minds on Wall St. who engineered a product called a Collateralized Mortgage Obligation (CMO). (more…)
Tags: ABS model on Wall Street, and distribute business model, Asset securitization on Wall Street, Aurora Mortgage, bankruptcy of Lehman, Bear Stearns, breakdown of rating agnecy models on Wall Street, business model on Wall Street, CMO business model on Wall Street, Countrywide, development of CBOs, development of CDS, development of CLOs, development of credit derivatives, EMC Mortgage, fannie Mae and Wall Street model, First Franklin, Freddie Mac and Wall Street model, Hedge Funds, history of Wall Street business model, junk mortgages, Lehman Bros, Maryann Hurley, Merrill LYnch, NINA loans, originate, originate and distribute, originate to distribute, originate to distribute model, originate to distribute modeli, origination and distribution business, origination business model on Wall Street, Paulson comments on Wall Street, rating agency models, securitize, securitizing loans, the Wall street model, underwriting of loans on Wall Street, volumes of asset securitizations, Wall Street, Wall Street business model, Wall Street engineering, Wall Street engineers, Wall Street finance, Wall Street model, Wall Street model is broken, Wall Street model won't soon be fixed, Wall Street operating model is broken, Wall Street quants, Wall Street securitization model, Wall Street securitization process, Wall Street trading
Posted in American Consumers, Banking Institutions, Current Affairs, Economy, Housing Crisis, Mortgage Crisis | 13 Comments »