All you free market people out there, how come you aren’t up in arms about the nationalization of these financial institutions? If there was better/stricter oversight on these institutions we wouldn't be having this problem in the first place... The profits are privatized and the losses are socialized....GREAT!!! This isn’t sending a good message to the rest of market..... sadly this mess isn’t even at the bottom yet....scary.
nationalization of fannie and freddie? is that what you are mad about? those 2 need to be run by the govt. they were completely out of control and horribly managed. some of their execs need to get sentenced to prison. blatant abuse of power and mismanagement is sickening stuff. the fed is trying to orchestrate a deal with LEH to get sold to anyone because they don't want a stress test of the credit default swap market. that market is completely UNREGULATED and totally out of control. i'm gonna guess the fed has some idea of the scope of the swap market on LEH and i am going to guess it is substantial....aka over a trillion.
Robbie, tell me who has been held responsible for this bad management? Why aren’t those who were running these corporations held accountable? Let’s be honest this was a tidal wave that everyone wanted to get on, nobody wanted to miss out on making money regardless of where the wave would end up.... and now they are abandoning ship without any consequences, to me that’s a sweet deal.... My point was that by the government taking over they are sending a message to other corporations that they’ll be there to bail them out..........but you are right, in this case they had to....
Robbie, Are you familiar with the double short financial ETF- SKF? I see Sept. 170 calls trading at .35 with basically 5 trading days left till expiration. SKF closed at 113.13 on Friday. These callls are basically 50% out of the money. I'm looking to sell calls at these 170 strike for premium accumulation. SKF top three holdings are the banks that are doing well at this time (BAC, WF, JPM), with little holdings of AIG, LEH etc... Am I missing something here, or why is there such premium left on these SKF calls with little less than a week left? Even if LEH fails, I don't see SKF jumping more than $10, despite LEH already nearing 0. For every 30 calls I sell at .35, I can bring in around $1000.
i guess you missed my line where i said some of their execs need to be in jail. they are criminals to the bone. the freakin ceo's of fannie and freddie wrote in their severance packages like a couple months before fnm and fre crashed. it's an absolute joke and i don't see how these guys don't get sentenced. they flat out lied about their earnings and assets for years. it's insane how it went on for so long. we aren't disagreeing.
hmm...interesting trade. if there is a bid at .35 for the 170 strikes then it would be hard not to sell it. it does seem rather excessive. hell even the oct 170's are at like 4.70. reminds me of bidu's excessive volatility pricing on their options before earnings. i might jump in on that too. i need to do some more research on it but it looks very intriguing. there might be some other bargains out there on the other 2x long/short etfs. you have my brain working right now so i will start trying to figure some stuff out. there may even be a decent way to hedge yourself with the xlf if you did go after the oct 170's on the skf as well.
Quite frankly, right now it may not matter whether Lehman goes under or not. Call them risky assets, but during the good business days, those risky assets were the same ones bringing Lehman's highest returns. No risk = no gains. Once Lehman sells those and Neuberger Berman, what's left? Nothing. Nothing that will bring them high returns when the market recovers. That and the fact that in the foreseeable future, nobody in their right mind is going to be the counter-party to any Lehman deals. Hence, there is a reason why nobody is making any offers. Besides, who's gonna buy them? The Feds engineered a deal for BSC with JPM, who's gonna buy Lehman if it fails. The thing is, anything coming out of the Fed now is nothing more than posturing. If they have to bail Lehman out, they will.
http://www.cnbc.com/id/26691041 Fed, Street Draft Deal To Buy Lehman's Bad Assets By Charlie Gasparino On-Air Editor | 13 Sep 2008 | 06:58 PM ET A deal has been drafted to buy Lehman Brothers' bad assets and clear the way for an eventual sale of the troubled firm, CNBC has learned. CNBC.com Under the terms of the proposal, which could still blow up, all the major Wall Street firms would pitch in $30 billion total to purchase Lehman's bad real estate assets and create what's knows as a "bad bank." The proposal is being drafted Saturday night and will be discussed Sunday morning, according to sources close to CNBC. If Wall Street agrees on the terms, which would amount to around $3 billion per firm, it would clear the way for the sale of Lehman Brothers itself to one of several suitors, including Bank of America, Barclays Plc and HSBC. Executives remained less than pleased with the proposal as they left the New York Federal Reserve around 6 p.m. to convene again Sunday morning. Contingency planning for no deal getting done, potential bankruptcy and defaults continues as Lehman continues its search for a buyer. "Why should we give up capital so Barclays and Bank of America can buy a clean bank," said one Wall Street executive. Because the consequences of not doing a Lehman deal are so grave, though, people with direct knowledge of the deliberation say both sides will begin to compromise on Sunday. One Wall Street executive involved in the meetings put it this way: "I'm thinking logically; if they do nothing it's Armageddon. That means they do a deal. It will be announced at 6 p.m. (ET) Sunday." Bank of America, Barclays, HSBC and private equity firms are interested in purchasing Lehman Brothers, though far below the $70 share price that Lehman enjoyed earlier in the year. Executives from these outfits have met with company officials who began to shop the firm after it became clear that a recent plan to add more capital wouldn't be enough to strengthen the firm, which holds around $40 billion in bad real estate assets on its books. But with firms like Bank of America and Barclays refusing — at least so far — to budge on their position that they will only buy Lehman without the beaten down real estate assets, and the street balking on the government plan, which calls on the big firms to chip in a total of around $3 billion to purchase the Lehman assets, people with direct knowledge of the meeting say a deal may not get done. Cramer: What Banks You Should Buy Are There Any Good Financial Stocks? Another problem: officials from the Federal Reserve and the Treasury were holding fast to their position that the government won't guarantee any of Lehman's bad assets, as they did with Bear Stearns, a move that allowed JP Morgan to purchased that troubled brokerage firm in March. But the Fed's stance might soon soften — as might the position of Wall Street — because the consequences are so dire. Without a deal, many market analysts predict Lehman will have to file for bankruptcy. Already, there is a near uprising at the firm. Top executives are saying they won't show up to work on Monday. It's unclear if other firms on the Street will continue to trade with Lehman and if Lehman can get loans from major financial players to fund its operations. Making matters worse, if Lehman does file for bankruptcy, top Wall Street executives involved in the meetings with government officials say they fear another financial firm may be next. All eyes have been on Merrill Lynch, which, despite a recent plan to strengthen its balance sheet, still has exposure to bad assets. Merrill, of course, is much more diversified firm than Lehman. It has the largest brokerage salesforce of any Wall Street firm, and a major investment in money management powerhouse, Blackrock. Merrill recently raised billions of dollars in new capital, in part by selling its interest in Bloomberg LP, and it sold much of its bad debt to outside buyers in a complex plan that forced the firm to take a huge writedown. But Merrill may not be out of the woods just yet. The firm still has some exposure to bad real estate, and short sellers may soon be targeting its stock, which has tanked in recent days, though top executives on Wall Street say Merrill could easily find a buyer such as a large bank because of the strength of its businesses. CNBC's Steve Liesman contributed to this report. © 2008 CNBC.com
not looking good for leh or my p/l on monday lol. but there could be some great buying ops monday on this gap down. i think futures are down like 350 right now. i dunno it will be interesting. http://www.cnbc.com/id/26704405 Street Prepares for Worst As Lehman Deal Stalls By Charlie Gasparino, On-Air Editor and Steve Liesman, Senior Economic Reporter | 14 Sep 2008 | 01:26 PM ET In a sign that Wall Street is preparing for the worst — a possible bankruptcy filing by Lehman Brothers [LEH 3.65 -0.57 (-13.51%) ] after Barclays PLC walked away from a deal to purchase the troubled Wall Street investment bank — brokers Sunday afternoon were streaming into their offices and a special trading session for credit default swaps was called. CNBC also has learned that Bank of America [BOFA Unavailable () ] has pulled out of negotiations to buy Lehman Brothers and has set its sights on Merrill Lynch & Co, Inc. The bank also has offered to take the other side of Lehman’s swap trades — essentially insurance that Lehman had provided for the bonds of other companies. "Right now all the firms are preparing for an orderly bankruptcy," said one Wall Street executive involved in the negotiations. Of course, a last minute deal could be reached, with all sides in this drama compromising and Barclays, or some other firm coming in to purchase Lehman. But as of now, reaching a deal appears remote because the federal government will not provide assistance to help Barclays or some other suitor purchase Lehman cleansed of its bad real estate assets. Meanwhile, the big Wall Street firms are balking at a plan to buy the bad debt because they say they don't have the money and are worried that they may be called on again to bail out another firm. For that reason, Wall Street traders headed back to their offices this afternoon to prepare for the market impact of a pre-package bankruptcy and the unwinding of Lehman's balance sheet of approximately $700 million. One Wall Street trader involved in the discussions with officials from the Federal Reserve said every firm had determined their exposure to Lehman by this morning, and were preparing for some Fed help in unwinding the trades. But officials from the Federal Reserve said they won't be involved in any such unwind — they told the Wall Street firms to work among themselves to determine how best to settle trades with Lehman. The Fall of Lehman Brothers Such a move adds another level of uncertainty to the markets as it braces for the growing possibility that Lehman will file for bankruptcy. Many traders expect massive selling pressure if Lehman does declare bankruptcy beginning when the Asian markets open. Still others can't believe there won't be a last minute compromise. "I can't believe people won't give a bit," said one trader involved in the negotiation. "I don't see why this is happening." One person with knowledge of Sunday's deliberation's called it "a big game of chicken" with all sides digging in their heels. Meanwhile, officials at one of Lehman's most highly prized assets, asset manager Neuberger Berman, were hoping to find out their fate this afternoon, but were told to simply stay by their e-mails for an announcement that may or may not come. Bank of America Bank of America sent a note to derivatives traders Sunday saying "Banks, brokers started netting Lehman trades from 2 p.m. today … trades netted are contingent on Lehman bankruptcy by midnight." The note continued "If no Lehman bankruptcy, netting of trades to be cancelled," meaning Bank of America's assumption of Lehman’s side of trades would end. "It’s a way of lessening the pressure before Wall Street opens up tomorrow. The more they can reduce the total brokerage book for Lehman, the less heart-ache there will be for counterparties if Lehman files," Carlos Mendez, senior managing director of ICP Capital in New York. The International Swaps and Derivatives Association called a special session from 2 p.m. to 4 p.m. but traders said that was purely symbolic. They intended to trade through the night. The cost of insuring the bonds of investment bankers blew out in trading on Sunday. Barclays Pulls Out Earlier in the day, Barclays of Britain pulled out of talks to buy Lehman Brothers , raising the possibility that a deal to rescue the embattled investment bank may not happen today. Bank of America is still involved in the talks, according to several reports, but the situation remains fluid. Barclays, which was considered the lead candidate to buy Lehman, reportedly was unable to agree on credit guarantees to shield them from potential losses. One person with direct knowledge of the negotiations told CNBC they don't think a deal will get done Sunday, though the situation could change at a moments notice. Top Wall Street executives arrived Sunday morning for another round of talks to resolve the Lehman crisis, and sources said the group continued to work on how to handle the possibility of a deal not getting done before Monday. By mid-morning, Federal Reserve Chairman Ben Bernanke was said to have been involved in several conversations by phone from Washington with officials meeting at the New York Federal Reserve. In addition, Bernanke was said to have made several calls already to foreign central bankers who are monitoring the proceedings carefully. New York Federal Reserve President Tim Geithner and Treasury Secretary Hank Paulson were already at the New York Fed by the time executives from top Wall Street firms began to arrive. Work went on through the night on a deal drafted Saturday to have a consortium of banks backstop Lehman's bad assets and sell off the rest of the bank to Bank of America and Barclays. But sources said key parts of the deal remained controversial Sunday morning. As reported, the banks backstopping the bad loans were said to be balking at the amount of capital required of the banks and the sense that they were supporting a good deal for Barclays and Bank of America. The larger group has been broken up into several working groups to devise responses to different possible outcomes. Among those, how markets can prepare for the possibility that Lehman might not find a buyer before Monday. Sources said the possibility of some kind of deal being struck this weekend still existed. —Reuters contributed to this story
From July 8th to July 15th (one week also), the SKF shot up 50% from about 140 to 210. With the Fed meeting this week, LEH and WaMu messes, and a lot of earnings of some of those investment banks (I think GS and others report this week), I'd guess it's pricing in the small possibility of financial disaster this week if all of those things go south. Say the Fed doesn't lower rates, LEH/WM don't find buyers, and GS severely disappoints. I still can't see it jumping past 170, but given that it did have the 50% jump in a week in July and it got as high at 210, I guess it's remotely possible.
I like what I see on the futures market. S&P support at 1223 is holding ... so far. If the worst case scenario happens and the market still doesn't fall below that point it's a great sign.
Chaos, panic, everyone and their mom is talking this...anyone else sense a bottom here??? Is it time to go fishing?
pretty much but it could get worse. I think this is a bottom area though. the news is indicative of one. there will be panic selling and forced selling in different stocks owned by various financial institutions. be cautious but be ready
lol man i am sitting here wondering how much i am going to be down to start the day tomorrow...boy i hope it is less than a 100. this is going to go down as one of the most historic weeks in market history so i just hope i can make some money off it rather than digging out of a hole. oh well it should be fun.
I interviewed with Lehman Brothers about 5 years ago and wasn't offered a job because there were simply too many fighting for a position with them. How the mighty has fallen.
Damn I wish I was wired like you. I wish I could "lol" having all kinds of money in GS, XLF, MS and JPM. I don't even want to wake up tomorrow morning...I agree it will be fun no matter what happens.
