September 15th, 2008
AIG capital deficit to be closed. Just like that!
Is this Tommy Cooper-meets-American insurance regulation?
New York Gov Paterson has granted Insurance Department superintendent Eric Dinallo authorisation to allow AIG to access $20bn of unspecified assets sitting in AIG subsidiaries and use these as collateral against a loan from the US treasury.
AIG watch
Moving swiftly on to the next part of this crisis…
Go here to watch the webcast of NY Governor Paterson reporting on the efforts of Superintendent Eric Dinallo, from the New York Insurance Department ,
CDS update: another Black Monday?
This CDS report was written by Markit’s Gavan Nolan.
The first weekend of September was one of high drama, with the government bailing out the GSEs Fannie Mae and Freddie Mac. But it was surpassed with ease by yesterday’s events.
Further Reading, afternoon crisis edition
Elsewhere this afternoon,
- 48-Hour timeline of events.
- “A 21-year-old Lehman graduate trainee in London, who declined to be identified by name, said he and 90 to 95 colleagues had been called in by the human resources department and made redundant.
Highlights from that Bank of Amerrilla Conference Call
Operator: Ladies and gentlemen, we are experiencing technical difficulties. Please remain on the line. The conference will now resume…
Operator: [Operator Instructions]. Our first question is from Matthew O’Connor at UBS
:
Crisis Live – III – 15 Sep 2008
Markets live chat transcript for the chat ending at 15:34 on 15 Sep 2008. Participants in this chat were: Neil Hume (NH) Paul Murphy (PM) Sam Jones (SJ) Bryce Elder (BE)
NH:
Right we are back for a third time today
Lehman’s unsecured creditors — Japanese banks back in post-bubble nightmare?
Even as the turmoil on Wall Street is reminding many in Japan of the bad, old post-bubble days, some of Japan’s banks are finding themselves back in a financial nightmare.
Japan’s Financial Services Agency on Monday ordered Lehman Brothers’ Japanese subsidiary to retain assets in the country as it emerged that Japanese banks were the US group’s top unsecured lenders.
Crisis Live – II – transcript 15 Sep 2008
Markets live chat transcript for the chat ending at 14:00 on 15 Sep 2008. Participants in this chat were: Neil Hume (NH) Paul Murphy (PM) Stacy-Marie Ishmael (SMI) Sam Jones (SJ) Bryce Elder (BE)
NH:
CDS report: Protection costs jump, but traders frozen
The cost of insuring European corporate debt against default shot up on Monday morning as traders struggled to digest the news that a large US investment bank was being allowed to fail.
However, market
Sentimental Lehman Brothers
Only two members so far in this fawning Facebook Group.
Will there be more soon or will Christian Meissner’s ominious employee communications and the threat of a clawed-back bonus put them off? Or perhaps New York is just far more emotional than the London office:
The Lunch Wrap
This morning on FT Alphaville,
- At noon (BST): FTSE -5.23%; FTSE Eurofirst -5%; DAX -4.2%; CAC -5.2%
- Full coverage of financial market meltdown at FT Alphaville.
- Lehman Brothers, 26 posts and counting.
Fun with Bloomberg functions: Lehman bonds edition
Pimco’s Bill Gross may have been lucky ($1.7bn lucky) when it comes to Fannie and Freddie. Will he be so lucky with his Lehman bonds?
CreditSights is saying holders of senior unsecured debt may get 60 – 80 cents to the dollar.
Lehman’s bonus clawback
Do you work at Lehman? Did you hear Christian Meissner (LEH’s co-head of investment banking in EMEA) tell you in a London meeting this morning that you were on your own and shouldn’t expect to be paid?
Because he did,
Lehman in default
Credit rating agency Fitch has just downgraded Lehman to D, the lowest mark on its scale.
Fitch Ratings-Chicago-15 September 2008: Fitch Ratings has downgraded the long- and short-term Issuer Default Ratings (IDRs) and outstanding debt ratings of Lehman Brothers Holdings Inc,
Crisis Live – I – transcript 15 Sep 2008
Markets live chat transcript for the chat ending at 12:16 on 15 Sep 2008. Participants in this chat were: Paul Murphy (PM) Neil Hume (NH)
PM:
Calm down.
PM:
EVERYBODY CALM DOWN
Japanification (II): Salutary lessons for hedgies and bankers
We recently outlined some striking similarities between Japanese and US financial crisis management tactics. But it seems that as financial turmoil spreads outwards from Wall Street, others, also, are seeing Japan parallels for almost every (grim) development in finance,
On AIG: 72 hours to live
Actually, 48 hours – 72 hours, in the event of a credit rating downgrade.
So reports the New York Times, citing an individual close to the firm. The reason for the dramatic warning: ratings downgrades would spell huge collateral calls from counterparties on AIG’s CDS.
On AIG: cash calling the Fed
The fall of Lehman brothers might well leading the news this morning, but the situation for AIG is potentially more serious. Systemically speaking, AIG is a much bigger domino.
For starters, AIG has written more credit protection – via CDS – than Bear Stearns.
Markets Live – much to discuss
Two Market Live sessions are scheduled for Monday – 11am, as per usual, and then again at 2pm to cover the US open.
But like the financial world in general right now, Neil Hume and Paul Murphy are said to be “fluid.”
FSA statement on Lehman…
…says nothing at all. Why bother?
Today, Lehman Brothers Holding Inc (“LBHI”), a U.S. investment bank, announced that it intends to file a petition under Chapter 11 of the U.S. Bankruptcy Code.
Lehman Brothers is a U.S.
Bove’s mea culpa on Lehman
We like an analyst who makes a bold call. We also like to hear what they have to say when they get it wrong.
So credit where it’s due – Richard X Bove, the Ladenburg Thalmann bank-watcher who shrieked “Buy Lehman”
Commodities, US financial chaos and headline inflation
With oil well below $100 a barrel and predictions of further falls in both oil and other key commodities, it’s another theme of the moment, as US financial chaos is only likely to increase pressure on commodities markets,
A good summer for David Einhorn
Also known as: “Would a short-selling ban have saved Lehman?”
The outspoken hedgie David Einhorn would have made a killing from his bets against Lehman Bros this summer. He first announced his position in April,
Unsecured LEH creditors, redux – recovery values edition
As noted earlier on FT Alphaville:
RTRS – Citigroup, Bank of New York Mellon, Azora Bank, Mizuho Financial Group, among Lehman’s top unsecured creditors.
RTRS – Citigroup, Bank of New York Mellon hold about $138bln of Lehman’s bond debt as indenture trustees,
Let’s catch up with some equity prices
The good news is that holders of British Energy saw their stock price rise 3p to 734p on Monday. That’ll be down to the market moving power of the Sunday Express, which said that French rival EDF is preparing to sweeten its bid.
Bank of England statement
Following the announcements overnight, the Bank of England will be monitoring carefully the conditions in sterling money markets and will take appropriate actions if necessary to stabilise those markets.
Trouble in Switzerland?
UBS down 7.9 per cent, Credit Suisse down 5.7 per cent.
Cue soothing words from the Swiss National Bank (emphasis ours):
(Reuters) The Swiss National Bank is monitoring financial markets very closely after the US bank Lehman Brothers filed for bankruptcy,
Lehman’s petition
Here’s the actual petition for bankruptcy for Lehman Brothers Holdings, Inc. Get a full copy here.
