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''Friday, September 19, 2008
MEΓΑΛΗ ΑΝΟΔΟΣ ΑΝΑΜΕΝΕΤΑΙ ΣΤΙΣ ΕΥΡΩΠΑΙΚΕΣ ΧΡΗΜΑΤΑΓΟΡΕΣ (19/09/08)
ΜΕΤΑ ΚΑΙ ΤΟ ΨΕΣΙΝΟ ΞΕΣΠΑΣΜΑ ΣΤΗΝ WALL STREET ΠΟΥ ΕΙΧΕ ΩΣ ΑΠΟΤΕΛΕΣΜΑ ΤΗΝ ΕΝΤΥΠΩΣΙΑΚΗ ΑΝΟΔΟ ΤΗΣ ΤΑΞΗΣ ΣΧΕΔΟΝ ΤΟΥ 4% (ΜΕΤΑ ΚΑΙ ΑΠΟ ΤΗΝ ΑΝΑΚΟΙΝΩΣΗ ΤΟΥ ΣΧΕΔΙΟΥ ΤΗΣ ΚΕΝΤΡΙΚΗΣ ΤΡΑΠΕΖΑΣ ΤΗΣ ΑΜΕΡΙΚΗΣ ΝΑ ΕΓΓΥΗΘΕΙ ΠΡΟΒΛΗΜΑΤΙΚΑ ΔΑΝΕΙΑ ΑΠΟ ΤΡΑΠΕΖΕΣ ΚΑΙ ΔΙΑΦΟΡΟΥΣ ΑΛΛΟΥΣ ΟΡΓΑΝΙΣΜΟΥΣ), ΟΙ ΑΣΙΑΤΙΚΕΣ ΧΡΗΜΑΤΑΓΟΡΕΣ ΑΚΟΛΟΥΘΗΣΑΝ ΤΟ ΤΡΕΛΛΟ ΡΑΛΙ ΜΕ ΤΗΝ ΙΑΠΩΝΙΚΗ ΧΡΗΜΑΤΑΓΟΡΑ ΝΑ ΣΗΜΕΙΩΝΕΙ ΑΥΤΗ ΤΗΝ ΣΤΙΓΜΗ ΑΝΟΔΟ ΤΗΣ ΤΑΞΗΣ ΤΟΥ 3.3% ΚΑΙ ΤΗΝ ΧΡΗΜΑΤΑΓΟΡΑ ΤΟΥ ΧΟΝΚ ΚΟΝΚ ΝΑ ΣΗΜΕΙΩΝΕΙ ΕΝΤΥΠΩΣΙΑΚΗ ΑΝΟΔΟ ΤΗΣ ΤΑΞΗΣ ΤΟΥ 6.5%. ΤΟ ΧΡΗΜΑΤΙΣΤΗΡΙΟ ΤΗΣ ΚΙΝΑΣ ΣΗΜΕΙΩΝΕΙ ΑΥΤΗ ΤΗΝ ΣΤΙΓΜΗ ΑΝΟΔΟ ΤΗΣ ΤΑΞΗΣ ΤΟΥ 9.3%!
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Posted by George Kettis at 08:32''
Economy | Business | Social | Leaked | Opinions
Saturday, September 20, 2008
Lehman Wins U.S. Court Approval for Sale to Barclays
Lehman Wins U.S. Court Approval for Sale to Barclays
Sept. 20 (Bloomberg) -- Lehman Brothers Holdings Inc., the U.S. investment bank that filed the largest bankruptcy in history, won federal court approval to sell its North American business to London-based Barclays Plc for $1.75 billion.
U.S. Bankruptcy Judge James Peck in Manhattan overruled objections from Lehman creditors who said the sale was moving too quickly, setting the stage for Barclays, the U.K.'s third- biggest bank, to close the deal over the weekend. Peck said it was clear no other purchaser would emerge if he delayed the sale, and that the deal would help stabilize global financial markets.
``I need to approve this transaction, because it's the only available transaction,'' Peck said. ``Lehman Brothers became a victim -- in effect the only true icon -- to fall in the tsunami that has befallen the credit markets, and it saddens me.''
Barclays President Robert Diamond called it the deal of a ``lifetime'' when the bank acquired Lehman's North American investment banking arm on Sept. 17, two days after Lehman collapsed. Barclays may add other parts of the failed investment bank to help it boost equity and advisory units in Europe and Asia, Diamond told analysts at the time.
The courtroom broke into applause when the hearing closed at 12:41 a.m. New York time.
``This week, more than any other week, I have felt the awesome power of this job,'' Peck said. ``This is the most momentous bankruptcy hearing I've ever sat through -- either as a lawyer or a judge.''
Lehman attorney Harvey Miller of Weil Gotshal & Manges said a rejection of the deal would have caused a ``major shock to the financial system.'' Miller previously said there were accounts with a total value of about $138 billion dependent on the sale.
Asset Sales
Lehman is selling off pieces that weren't included in the New York-based holding company's bankruptcy filing. The Securities Investor Protection Corp. began a liquidation proceeding for the brokerage and appointed a trustee who must also approve the sale. The SIPC is an insurance fund created under federal law and financed by brokerages.
Hedge fund Harbinger Capital Partners had asked the judge to block the sale unless Lehman immediately disclosed cash transfers it made just prior to its bankruptcy, including an alleged $5 billion transfer of cash from Lehman's London office. Another two hedge funds, Bay Harbour Management LC and Amber Capital, filed papers alleging $8 billion was moved.
Regulators including the U.S. Securities and Exchange Commission and the Federal Reserve Bank of New York favored the deal. Some creditors argued the sale should have been delayed to seek a better deal for Lehman's assets amid a government plan to purge banks of bad assets and crack down on speculators who drove down shares of financial companies.
`Extraordinary Example'
``This is Friday; the case was filed on Monday. What we're doing is unheard of,'' Peck said when approving the sale. ``It's an extraordinary example of the flexibility that bankruptcy affords.''
The deal involves the sale of Lehman's investment-banking, fixed-income and equities sales, trading and research divisions. The price values Lehman's headquarters building in New York and two data centers in New Jersey at a total of $1.29 billion -- a reduction of as much as $200 million from an earlier estimate. Barclays will also assume as much as $2.5 billion in liabilities related to Lehman workers and about $1.5 billion in costs for altering contracts, according to court papers. Some 10,000 Lehman workers will move to Barclays as part of the sale.
Lehman's broker dealer unit now has only $47.4 billion of securities and $45.5 billion of liabilities to be assumed by Barclays, or a net value of $1.9 billion -- a change from the earlier $72 billion in securities and $68 billion of liabilities, or a net value of $4 billion, Miller said.
Integration
Barclays's asset management and investment banking chief operating officer Rich Ricci will be chief executive officer of the Lehman U.S. unit for about three months, to oversee its integration.
Diamond, who abandoned talks to buy all of Lehman less than 24 hours before it collapsed, has said he wants Barclays to take market share from Wall Street firms weakened by the credit crunch and break into the ``top tier'' of U.S. securities firms. Less than 5 percent of the U.S. assets Barclays bought are mortgage-related, he said.
Barclays declined to bid for all of Lehman after three days of emergency negotiations involving the U.S. Treasury and Federal Reserve. Barclays couldn't get guarantees from the government to mitigate what it called Lehman's ``open-ended'' trading obligations, it said Sept. 14.
Collapsed Talks
New York-based Lehman, a holding company, filed for Chapter 11 protection on Sept. 15, stating it had debt of $613 billion and assets of $639 billion after talks to sell the entire company collapsed. Barclays is providing a $450 million loan for Lehman to use during the bankruptcy that is tied to the buyout. The loan is secured by Lehman's interest in its fund manager unit Neuberger Berman LLC.
Lehman is also in discussions to sell its investment- management unit to private-equity bidders Bain Capital LLC and Hellman & Friedman LLC, people familiar with the negotiations said this week.
Barclays is adding Lehman units to areas where Barclays own securities unit has the ``weakest positions,'' Diamond said Sept. 17. Lehman ranked seventh in advising on mergers and acquisitions involving U.S. companies this year, according to data compiled by Bloomberg. Barclays ranks 35th in that market.
Japan Unit
Lehman's Japan unit is trying to sell assets including its equity, investment banking and real-estate businesses to potential buyers including Barclays and Mitsubishi UFJ Financial Group Inc., two people familiar with the matter said. Sumitomo Mitsui Financial Group Inc. may also buy assets, the people said.
Lehman's European corporate finance and asset management units are close to finding a buyer, said Lehman's European administrator, PricewaterhouseCoopers. Barclays and Nomura Holdings Inc., Japan's biggest securities firm, are among potential buyers of assets at the subsidiaries, which employ about 4,500 people at headquarters in London's Canary Wharf.
Lehman placed four of its European units in administration on Sept. 15.
The committee includes Wilmington Trust Co., Bank of New York Mellon Corp., Shinsei Bank Ltd., Mizuho Corporate Bank Ltd., Royal Bank of Scotland Plc, MetLife Inc. and R.R. Donnelley & Sons Co.
An attorney for some Lehman bondholders, Daniel Golden of Akin Gump Strauss Hauer & Feld, said at a Sept. 17 court hearing in U.S. Bankruptcy Court in Manhattan that Lehman should give more information to creditors about the sale negotiations that took place before the company sought court protection.
The case is In re Lehman Brothers Holdings Inc., 08-13555, U.S. Bankruptcy Court, Southern District of New York (Manhattan).
BLOOMBERG
Sept. 20 (Bloomberg) -- Lehman Brothers Holdings Inc., the U.S. investment bank that filed the largest bankruptcy in history, won federal court approval to sell its North American business to London-based Barclays Plc for $1.75 billion.
U.S. Bankruptcy Judge James Peck in Manhattan overruled objections from Lehman creditors who said the sale was moving too quickly, setting the stage for Barclays, the U.K.'s third- biggest bank, to close the deal over the weekend. Peck said it was clear no other purchaser would emerge if he delayed the sale, and that the deal would help stabilize global financial markets.
``I need to approve this transaction, because it's the only available transaction,'' Peck said. ``Lehman Brothers became a victim -- in effect the only true icon -- to fall in the tsunami that has befallen the credit markets, and it saddens me.''
Barclays President Robert Diamond called it the deal of a ``lifetime'' when the bank acquired Lehman's North American investment banking arm on Sept. 17, two days after Lehman collapsed. Barclays may add other parts of the failed investment bank to help it boost equity and advisory units in Europe and Asia, Diamond told analysts at the time.
The courtroom broke into applause when the hearing closed at 12:41 a.m. New York time.
``This week, more than any other week, I have felt the awesome power of this job,'' Peck said. ``This is the most momentous bankruptcy hearing I've ever sat through -- either as a lawyer or a judge.''
Lehman attorney Harvey Miller of Weil Gotshal & Manges said a rejection of the deal would have caused a ``major shock to the financial system.'' Miller previously said there were accounts with a total value of about $138 billion dependent on the sale.
Asset Sales
Lehman is selling off pieces that weren't included in the New York-based holding company's bankruptcy filing. The Securities Investor Protection Corp. began a liquidation proceeding for the brokerage and appointed a trustee who must also approve the sale. The SIPC is an insurance fund created under federal law and financed by brokerages.
Hedge fund Harbinger Capital Partners had asked the judge to block the sale unless Lehman immediately disclosed cash transfers it made just prior to its bankruptcy, including an alleged $5 billion transfer of cash from Lehman's London office. Another two hedge funds, Bay Harbour Management LC and Amber Capital, filed papers alleging $8 billion was moved.
Regulators including the U.S. Securities and Exchange Commission and the Federal Reserve Bank of New York favored the deal. Some creditors argued the sale should have been delayed to seek a better deal for Lehman's assets amid a government plan to purge banks of bad assets and crack down on speculators who drove down shares of financial companies.
`Extraordinary Example'
``This is Friday; the case was filed on Monday. What we're doing is unheard of,'' Peck said when approving the sale. ``It's an extraordinary example of the flexibility that bankruptcy affords.''
The deal involves the sale of Lehman's investment-banking, fixed-income and equities sales, trading and research divisions. The price values Lehman's headquarters building in New York and two data centers in New Jersey at a total of $1.29 billion -- a reduction of as much as $200 million from an earlier estimate. Barclays will also assume as much as $2.5 billion in liabilities related to Lehman workers and about $1.5 billion in costs for altering contracts, according to court papers. Some 10,000 Lehman workers will move to Barclays as part of the sale.
Lehman's broker dealer unit now has only $47.4 billion of securities and $45.5 billion of liabilities to be assumed by Barclays, or a net value of $1.9 billion -- a change from the earlier $72 billion in securities and $68 billion of liabilities, or a net value of $4 billion, Miller said.
Integration
Barclays's asset management and investment banking chief operating officer Rich Ricci will be chief executive officer of the Lehman U.S. unit for about three months, to oversee its integration.
Diamond, who abandoned talks to buy all of Lehman less than 24 hours before it collapsed, has said he wants Barclays to take market share from Wall Street firms weakened by the credit crunch and break into the ``top tier'' of U.S. securities firms. Less than 5 percent of the U.S. assets Barclays bought are mortgage-related, he said.
Barclays declined to bid for all of Lehman after three days of emergency negotiations involving the U.S. Treasury and Federal Reserve. Barclays couldn't get guarantees from the government to mitigate what it called Lehman's ``open-ended'' trading obligations, it said Sept. 14.
Collapsed Talks
New York-based Lehman, a holding company, filed for Chapter 11 protection on Sept. 15, stating it had debt of $613 billion and assets of $639 billion after talks to sell the entire company collapsed. Barclays is providing a $450 million loan for Lehman to use during the bankruptcy that is tied to the buyout. The loan is secured by Lehman's interest in its fund manager unit Neuberger Berman LLC.
Lehman is also in discussions to sell its investment- management unit to private-equity bidders Bain Capital LLC and Hellman & Friedman LLC, people familiar with the negotiations said this week.
Barclays is adding Lehman units to areas where Barclays own securities unit has the ``weakest positions,'' Diamond said Sept. 17. Lehman ranked seventh in advising on mergers and acquisitions involving U.S. companies this year, according to data compiled by Bloomberg. Barclays ranks 35th in that market.
Japan Unit
Lehman's Japan unit is trying to sell assets including its equity, investment banking and real-estate businesses to potential buyers including Barclays and Mitsubishi UFJ Financial Group Inc., two people familiar with the matter said. Sumitomo Mitsui Financial Group Inc. may also buy assets, the people said.
Lehman's European corporate finance and asset management units are close to finding a buyer, said Lehman's European administrator, PricewaterhouseCoopers. Barclays and Nomura Holdings Inc., Japan's biggest securities firm, are among potential buyers of assets at the subsidiaries, which employ about 4,500 people at headquarters in London's Canary Wharf.
Lehman placed four of its European units in administration on Sept. 15.
The committee includes Wilmington Trust Co., Bank of New York Mellon Corp., Shinsei Bank Ltd., Mizuho Corporate Bank Ltd., Royal Bank of Scotland Plc, MetLife Inc. and R.R. Donnelley & Sons Co.
An attorney for some Lehman bondholders, Daniel Golden of Akin Gump Strauss Hauer & Feld, said at a Sept. 17 court hearing in U.S. Bankruptcy Court in Manhattan that Lehman should give more information to creditors about the sale negotiations that took place before the company sought court protection.
The case is In re Lehman Brothers Holdings Inc., 08-13555, U.S. Bankruptcy Court, Southern District of New York (Manhattan).
BLOOMBERG
Democrats Seek to Add Subprime Relief to Paulson's Rescue Plan
Democrats Seek to Add Subprime Relief to Paulson's Rescue Plan
Sept. 20 (Bloomberg) -- U.S. Treasury Secretary Henry Paulson is sending a financial-rescue plan worth about $800 billion to Congress as Democrats prepare to turn it into a vehicle to help people with high-cost mortgages stay in their homes.
The Treasury will run the program to take on illiquid mortgage-related debt, with the Federal Reserve consulting on its design, officials said. Treasury aides are spending the weekend with congressional staff to negotiate a compromise that the House and Senate can vote on next week.
Paulson, Fed Chairman Ben S. Bernanke and other regulators are eager to stop a contagion of credit risk that has toppled three financial giants and forced one into a merger as capital flight began to squeeze Wall Street. Democrats are indicating they want to target relief for households by restructuring loans of struggling borrowers.
``We're going to be buying up a lot of mortgage paper,'' said House Financial Services Committee Chairman Barney Frank, a Massachusetts Democrat. ``Between Fannie Mae and Freddie now owned by the federal government and the mortgage paper we'll be acquiring here'' and the Federal Deposit Insurance Corp. running failed bank IndyMac Bancorp Inc., ``we should now be able substantially to reduce foreclosures,'' he said.
Frank said the Treasury was due to present the plan to lawmakers late yesterday.
$800 Billion
The program may be worth about $800 billion, split into $50 billion tranches, said four people briefed on drafts of the Treasury's proposal who spoke on condition of anonymity because details haven't been finalized. The funds, which would last for at least two years, will likely accept mortgage-backed securities and collateralized debt obligations, they said.
The Treasury plans to hire asset managers to purchase the assets through so-called reverse auctions, seeking the lowest prices, one of the people said. Congress will need to raise the limit for the federal debt to allow the government to borrow enough to fund the program, the person said.
Republicans warned against turning the bailout into an agenda.
``Congress and the administration must keep this plan as simple and straightforward as possible,'' said John Boehner, the leading Republican in the House. ``Loading it up to score political points or fit a partisan agenda will only delay the economic stability that families, seniors, and small businesses deserve.''
Last Resort
The Treasury is stepping up as the buyer of last resort for mortgage-linked assets that few other financial institutions in the world want to buy. To avoid giving a direct subsidy to Wall Street, officials must structure the fund so taxpayers either get fees, a high rate of interest, or some participation in the full recovery of the assets.
``Illiquid assets are choking off the flow of credit that is so vitally important to our economy,'' Paulson said yesterday at a press conference in Washington. ``As illiquid mortgage assets block the system, the clogging of our financial markets has the potential to have significant effects on our financial system and our economy.''
Senator Richard Shelby, an Alabama Republican who has advocated that markets should be allowed to penalize bad bets, warned that bailout could saddle taxpayers with large debts.
``This could be the biggest bailout in the history of the country and could ultimately cost $500 billion to $1 trillion,'' Shelby, the ranking Republican on the Senate Banking Committee, said in a Bloomberg Television interview yesterday. ``Congress is not going to rubber stamp something.''
Delinquencies Soar
Nearly one-in-10 American mortgages is delinquent or in foreclosure. The government would be buying debt backstopped by the U.S. home values that have been falling in value for eight consecutive quarters, according to the S&P Case-Shiller U.S. Home Price Index.
Senator Christopher Dodd, the Banking Committee chairman, said the plan's framers should consider the full debt load of U.S. consumers, possibly including credit cards.
``We'' have ``got some strong concerns about what's included here,'' said Dodd, a Connecticut Democrat. ``They haven't limited this conversation exclusively to residential mortgages. So I know that other securitized debt is also going to be considered.''
Investors are unlikely to tolerate partisan wrangling and brinksmanship. U.S. stocks surged in the biggest two-day global rally in history as talk of the plan began to circulate Sept. 18.
The House will pass legislation to implement the plan by the end of next week, and the Senate will act soon after, Frank said yesterday in an interview on Bloomberg Television's ``Political Capital with Al Hunt.''
Stimulus Spending
The temporary plan is likely to include a ``second stimulus'' proposal with infrastructure funds, low-income energy aid and Medicaid assistance, Frank said. Congress will begin weighing broad regulation of hedge funds, private-equity firms and investment banks when it reconvenes next year, he said.
Frank, in a separate C-Span interview, said he expects Wall Street executives to give up pay and other perks in exchange for the federal intervention.
Officials devising the plan ``need to make sure that they keep that hard-headed approach so that people are not profiting off this,'' said Martin Baily, who was chairman of the Council of Economic Advisers under Democratic President Bill Clinton.
``To some extent that's unavoidable,'' said Baily, now a senior fellow at the Brookings Institution in Washington. ``Anytime you do something like this you have the problem of bailing people out and creating moral hazard. That's the reason why you hold your nose. But it's better than the alternative.''
BLOOMBERG
Sept. 20 (Bloomberg) -- U.S. Treasury Secretary Henry Paulson is sending a financial-rescue plan worth about $800 billion to Congress as Democrats prepare to turn it into a vehicle to help people with high-cost mortgages stay in their homes.
The Treasury will run the program to take on illiquid mortgage-related debt, with the Federal Reserve consulting on its design, officials said. Treasury aides are spending the weekend with congressional staff to negotiate a compromise that the House and Senate can vote on next week.
Paulson, Fed Chairman Ben S. Bernanke and other regulators are eager to stop a contagion of credit risk that has toppled three financial giants and forced one into a merger as capital flight began to squeeze Wall Street. Democrats are indicating they want to target relief for households by restructuring loans of struggling borrowers.
``We're going to be buying up a lot of mortgage paper,'' said House Financial Services Committee Chairman Barney Frank, a Massachusetts Democrat. ``Between Fannie Mae and Freddie now owned by the federal government and the mortgage paper we'll be acquiring here'' and the Federal Deposit Insurance Corp. running failed bank IndyMac Bancorp Inc., ``we should now be able substantially to reduce foreclosures,'' he said.
Frank said the Treasury was due to present the plan to lawmakers late yesterday.
$800 Billion
The program may be worth about $800 billion, split into $50 billion tranches, said four people briefed on drafts of the Treasury's proposal who spoke on condition of anonymity because details haven't been finalized. The funds, which would last for at least two years, will likely accept mortgage-backed securities and collateralized debt obligations, they said.
The Treasury plans to hire asset managers to purchase the assets through so-called reverse auctions, seeking the lowest prices, one of the people said. Congress will need to raise the limit for the federal debt to allow the government to borrow enough to fund the program, the person said.
Republicans warned against turning the bailout into an agenda.
``Congress and the administration must keep this plan as simple and straightforward as possible,'' said John Boehner, the leading Republican in the House. ``Loading it up to score political points or fit a partisan agenda will only delay the economic stability that families, seniors, and small businesses deserve.''
Last Resort
The Treasury is stepping up as the buyer of last resort for mortgage-linked assets that few other financial institutions in the world want to buy. To avoid giving a direct subsidy to Wall Street, officials must structure the fund so taxpayers either get fees, a high rate of interest, or some participation in the full recovery of the assets.
``Illiquid assets are choking off the flow of credit that is so vitally important to our economy,'' Paulson said yesterday at a press conference in Washington. ``As illiquid mortgage assets block the system, the clogging of our financial markets has the potential to have significant effects on our financial system and our economy.''
Senator Richard Shelby, an Alabama Republican who has advocated that markets should be allowed to penalize bad bets, warned that bailout could saddle taxpayers with large debts.
``This could be the biggest bailout in the history of the country and could ultimately cost $500 billion to $1 trillion,'' Shelby, the ranking Republican on the Senate Banking Committee, said in a Bloomberg Television interview yesterday. ``Congress is not going to rubber stamp something.''
Delinquencies Soar
Nearly one-in-10 American mortgages is delinquent or in foreclosure. The government would be buying debt backstopped by the U.S. home values that have been falling in value for eight consecutive quarters, according to the S&P Case-Shiller U.S. Home Price Index.
Senator Christopher Dodd, the Banking Committee chairman, said the plan's framers should consider the full debt load of U.S. consumers, possibly including credit cards.
``We'' have ``got some strong concerns about what's included here,'' said Dodd, a Connecticut Democrat. ``They haven't limited this conversation exclusively to residential mortgages. So I know that other securitized debt is also going to be considered.''
Investors are unlikely to tolerate partisan wrangling and brinksmanship. U.S. stocks surged in the biggest two-day global rally in history as talk of the plan began to circulate Sept. 18.
The House will pass legislation to implement the plan by the end of next week, and the Senate will act soon after, Frank said yesterday in an interview on Bloomberg Television's ``Political Capital with Al Hunt.''
Stimulus Spending
The temporary plan is likely to include a ``second stimulus'' proposal with infrastructure funds, low-income energy aid and Medicaid assistance, Frank said. Congress will begin weighing broad regulation of hedge funds, private-equity firms and investment banks when it reconvenes next year, he said.
Frank, in a separate C-Span interview, said he expects Wall Street executives to give up pay and other perks in exchange for the federal intervention.
Officials devising the plan ``need to make sure that they keep that hard-headed approach so that people are not profiting off this,'' said Martin Baily, who was chairman of the Council of Economic Advisers under Democratic President Bill Clinton.
``To some extent that's unavoidable,'' said Baily, now a senior fellow at the Brookings Institution in Washington. ``Anytime you do something like this you have the problem of bailing people out and creating moral hazard. That's the reason why you hold your nose. But it's better than the alternative.''
BLOOMBERG
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