FT Alphaville goes back to the morning (and afternoon) of September 15. Here’s what the blogs and media were saying as the day’s events unfolded.
The media:
Wilbur Ross: Possibly a Thousand Banks Will Close – CNBC
In an exclusive interview with CNBC.com, Wilbur Ross, chairman and CEO of WL Ross & Co., says he sees possibly as many as a thousand bank closures in the coming months. And this will create opportunities for investors.
Bank of America to buy Merrill – WSJ
In a rushed bid to ride out the storm sweeping American finance, 94-year-old Merrill Lynch & Co. agreed late Sunday to sell itself to Bank of America Corp. for $50 billion. The deal, worked out in 48 hours of frenetic negotiating, could instantly reshape the U.S. banking landscape, making the nation’s prime behemoth even bigger. Late Sunday night, the companies’ boards had approved the deal, but lawyers were negotiating over last-minute details. The WSJ’s front page for the day is available here.
“AIG might survive for only 48 hours to 72 hours” – NYT
Shares in AIG tumbled more than 60 percent on Monday morning as investors grew concerned that the firm lacked capital to withstand cuts to its debt rating. But Mr. Paterson reiterated the state’s support of the firm and declared A.I.G. “financially sound.” The front page of the NYT is available here.
Lehman workers clear desks, weep after bankruptcy – Bloomberg
A 21-year-old Lehman graduate trainee in London, who declined to be identified by name, said he and 90 to 95 colleagues were called in by the human resources department and made redundant. They started work a week ago.
A tragedy of hubris and nemesis – FT
Lehman’s collapse is worrying for financial markets and for Wall Street as a whole. It is also a tragedy for its 24,000 employees, who were drilled into unwavering loyalty and cohesion by Mr Fuld. Many held a lot of their wealth in Lehman shares, which have lost most of their value.
It is also a tragedy for Mr Fuld, in the classical Greek sense. He had devoted so much of his life and his personality into moulding the bank he could not accept its decline. If he had sold out earlier, Lehman might have survived but he was too proud. It was hubris, followed by nemesis.
Investment banks’ future questioned – FT
When Chase Manhattan bought JPMorgan in the autumn of 2000, many thought the deal would trigger a series of mergers in the investment banking business. Senior bankers predicted that other Wall Street firms such as Bear Stearns, Lehman Brothers and Merrill Lynch would have to join forces with larger lenders or risk being marginalised. Eight years on, those predictions are finally coming true.
The blogosphere:
Coffee cart man doesn’t think we’ve hit bottom yet – Dealbreaker
So, I just left Lehman Brothers’s Coffee Cart Man (CCM), whose real (nick)name is Leon, which almost sounds too good to be true, alliteration-wise…”When they suffer I suffer,” Big L said. Apparently he’d been following the story on BBC London last night/early this morning and thinks the bankruptcy filing “sucks, but what can you do?”
Wall Street’s collapse delivers an overdue wake up call to startups – Silicon Alley Insider
Today Lehman is filing for Chapter 11 bankruptcy protection, and Merrill Lynch is being bought for chicken feed by Bank of America. The Wall Street sky is falling. but what does that mean to tech companies, and particularly to startups?
Where was Lehman’s board? – Deal Journal
As the world nervously awaits the effects of the unprecedented Lehman Brothers liquidation, one can’t help but wonder how and why this board let its long-time chairman and patron, Richard Fuld Jr., cling to both hope and power.
Blame the short-sellers – Paul Kedrosky
Given today’s news, expect a major round of the good old “Blame the short-sellers” game to commence.
The fire sales begin: Lehman unloading $852m of LBO loans – Naked Capitalism
Ah, now the script that everyone was trying to avoid, that of an institution failing, selling assets in bulk leading to distressed prices, which forces other players to mark their books down to the new market prices, leading to losses and reductions of already-scarce equity, is now playing at your local credit market.
AIG thrown a lifeline of sorts – WSJ MarketBeat
The past 24 hours have helped define the parameters of what is too big to fail. The answer is this: Larger than Lehman Brothers, and smaller than AIG.