Lehman Brothers bank to go into insolvency (maybe)

[sappatz]

Lehman had 750 bln USD of derivatives in its book. guess we have a problem

[eliquant]

A sort of similar thing occured with Natwest Markets ... banks just get sold off in chunks as and when the problems start.

Its just the way of things.

[BrilloPad]

FTSE has gone through -5%
Banking? HBOS Hbos Plc 189.0 -32.98%

Possible buying opportunity?

[dude69]

Do we have any agents here?

How are things?

Being deluged with CVs from ex-Lehman staff?

Or will they come tomorrow.

[BrilloPad]

Lehman had 750 bln USD of derivatives in its book. guess we have a problem

Is that the notional value? How much of those were in credit derivatives?

They **could** have been shorting the major indexes and sitting on a packet now. Though I doubt it.

[DaveB]

It is a possibility - but why not just head hunt the people you want? I bet they would be so pleased of a job they would work for peanuts.

Apologies if this sounds a bit heartless - I do feel sorry for them. I have a couple of friends there - very upsetting.

It's easier as a corporate entity to buy a business, or a chunk of it, wholesale rather than try and cherry pick individuals. The bits of Lehmans that are carrying the losses will be let go and the rest broken up and sold as going concerns to the highest bidder. From what I can tell a lot of the Lehmans operation was still profitable, just not profitable enough to support the losses incurred by the bits involved in mortgage equities.

[Fred Bloggs]

Possible buying opportunity?

For the brave (or foolhardy?).

[Fred Bloggs]

I told ya guys, time to escape from financial companies to Oil companies, pure black gold

Yup. For now............

[BrilloPad]

For the brave (or foolhardy?).

The difference between the two can be quite small sometimes.

These DOOM things always cause overselling - whether stocks or house prices. Thing is I feel it will get worse before it gets better.

If you believe that stock markets look 18 months ahead(and are not just a casino) then there is trouble for a long while to come.

[KentPhilip]

So has Mervyn King been wrong to give loans to all banks since then ? Have the other Central Banks been wrong to do the same ?
Giving short-term loans as long as the banks have assets to cover the loans is the obvious thing to do. Northern Rock was making a profit and assets far exceeded liabilities. Drying up of money markets had nothing to do with that bank at all, but was due to other banks overwhelming subprime losses.

There are some banks that Mervyn was right to give loans to, but many that he has not been right to.

Yes giving loans to banks with assets is fine, but I don't agree that Northern Rock's assets exceeded liabilities - the reverse was the case. They had loaned billions to subprime borrowers who are unable to pay them back. So Northern Rock was insolvent and belonged in the garbage can.