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’Snap news
Breaking pre-market news on Wednesday,
- Lehman’s joint chapter 11 plan gets support from creditors holding over $160bn in claims – Reuters.
- PSA Peugeot warns on automotive profit, cash flow – statement.
Treasuries, Lehman-fied [updated]
If there’s a chart to encapsulate Thursday’s market panic:
It’ll be the 10-year Treasury yield falling under 2 per cent. That’s breaching the lows seen in 2008 after Lehman Brothers collapsed. We’re checking when Treasuries were last this low,
Dick Fuld and E&Y fail to dismiss Repo 105 case [updated]
It’s been a day of important Lehman Brothers legal verdicts.
On Wednesday morning in New York, the US District Court in Manhattan rejected a move by former Lehman Brothers executives and auditors to dismiss litigation brought by investors who allege they were misled by the bank’s Repo 105 practices.
The Lehman flip-clause flap gets settled – sort of
That’s a big deal for the structured finance world, though you might not know it.
It’s to do with the loooong and continued unwinding of Lehman Brothers. Specifically it’s to do with a synthetic special purpose vehicle called Saphir (part of Dante) that Lehman set up back in 2002.
Snap news
Breaking pre-market news on Monday,
- Glencore to acquire 70 per cent stake in Mina Justa Project for $475m – statement.
- Man Group to acquire Lehman exposure from its GLG Partners subsidiary – statement.
More on Europe’s Lehman moment
It’s an analogy already made by many commentators on Thursday.
And picked up with some aplomb on Friday by BNP Paribas’ Mehernosh Engineer:
A confluence of events has increased volatility which could turn systemic in nature.
Clear and present danger
This is barking — but rather readable if you’re the sort of person who enjoyed Oliver Stone’s JFK.
It’s a report commissioned by the Department of Defense Irregular Warfare Support Program which claims the US is facing an ‘Economic Pearl Harbor’ and the attack has entered its third and most critical phase.
Lehman in SCDO trial down under
Bloomberg reports Wednesday on the first day of an Australian trial involving a long-running dispute with potentially interesting consequences for notions of fiduciary duty:
Wingecarribee Shire Council,
FCIC audio and a forgetful Fuld
The Federal Crisis Inquiry Commission has released the audio interviews to go along with its 662-page potboiler. We’re talking hours and hours of stuff to listen to here.
And there are some big names — Goldman’s Lloyd Blankfein,
Aladdin’s synthetic CDO lawsuit
There are two nominations that go along with this post. One is for headline of the year; the other is the award for worst (synthetic) CDO ever made, quite possibly.
From Reuters on Tuesday:
German
Sneaky Citi, tricksy bailout
It’s November 21, 2008.
Lehman collapsed some nine weeks before and the US government is struggling to contain the fallout. They’ve started Tarp and injected funds into ailing financials, but it’s having little effect.
Cuomo’s coruscating complaint
Who ever said legalese was dull?
The complaint filed by Andrew Cuomo is a ripsnorting romp through the sordid business of Repo 105.
The main allegations against E&Y are well known via Anton Valukas’s March 2010 report into Lehman’s bankruptcy,
Cuomo files suit against Ernst & Young [updated]
It’s official — Repo 105 will have its day in court (flash from Reuters):
Accounting firm Ernst & Young was sued by New York regulators on Tuesday, accused of helping to hide financial risks at Lehman Brothers Holdings Inc before the Wall Street firm’s 2008 collapse.
The Lehman flip [updated]
So the Lehman Bros estate has managed to clawback $500m worth of deposits from Bank of America — which means its sights are firmly set on its next legal pursuit.
Bloomberg, for instance, is currently running a story about the ‘next target’ of the Lehman estate — JP Morgan and its $8.6bn of collateral,
FSA reopens the Lehman files
Remember the just-who-is-a-sophisticated-investor debate around the Abacus case against Goldman Sachs earlier this year?
Here’s a strange UK coda.
The UK’s Financial Services Authority dished out not one but three fines on Wednesday to advisers which failed to give suitable guidance on structured products backed by Lehman Brothers.
Lehman homage in Afghanistan (of sorts)
Writing the day before the second anniversary of Lehman Brothers’ fall, Gideon Rachman argues that ’9/15′ might matter more to America in the long run than 9/11.
While you can argue with that, there is now another parallel of sorts between the two dates,
To: Ben Bernanke Re: Everyone thinks Lehman is &!@%#!
Economics of Contempt is once again digging up bits of the Valukas Report.
Much more — in particular the Fed’s back-up plans for the busted bank –at EofC.
A stunned short-seller never forgets
For sure the 2008 financial crisis lingers on in the minds’ of long-only investors, but perhaps it’s surprising to hear the episode scarred the shorts too. And not just because they got banned, scapegoated or squeezed.
The tale of the Shadow Banks
Here’s a scary story to recount at finance campfires.
It’s the Federal Reserve Bank of New York’s monograph on the rapid growth — and collapse — of the shadow banking system. It’s also 81-pages of acronyms (think CDOs,
Quis custodiet ipsos custodes? Or, the FSA on auditors
Here’s a discussion paper to strike fear into the hearts of prompt debate among audit firms — another analysis of their failings in the banking crisis, carried out by the UK’s financial regulator, the FSA.
The awards curse strikes at JP Morgan…
Last Friday:
[The Banker Innovation in Banking Technology Awards 2010]
Chair’s Choice and Innovation in Custody and Securities Services
Winner: JPMorgan (Worldwide Securities Services)
Project:
Vix-ated
On Thursday the Vix shot up above 45.
So what?, you might say. The Vix was over 80 just a year-and-a-half ago, after the Lehman Brothers collapse.
That’s true, but as Vix and More pointed out in a Thursday post,
Europe is Lehman-fied, part quatre
There have been more than a few comparisons drawn between the crisis in the eurozone and Lehman Brothers here on FT Alphaville. Here’s another, via Tullett Prebon Economist Lena Komileva.
Here are extracts from Komileva’s argument,
Creative comp – Fuld claimed to have earned $200m more than he stated
You’ll have to bear with us a little here. Bloomberg are running a story that says Lehman’s brooding chief executive, Dick Fuld, was paid 70 per cent more than he claimed during the period 2000 to 2007 – $529.4m rather than the “less than $310m”
Schapiro defends regulators. Again.
Mary Schapiro must be getting a bit bored of having to mount lengthy defences of the regulatory bodies she has headed.
Under her tenure, for instance, FINRA failed entirely to investigate numerous tips that Allen Stanford and Bernard Madoff might not have been on their best behaviour.
Lehman’s alter ego – or was it?
Thank heavens for Lehman’s Repo 105.
Revelations of the repurchase arrangement, which helped the former investment bank hide risk ahead of quarterly reporting season, have initiated a spate of investigative reportage on all matters off-balance sheet.