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"Treasury Secretary, Henry Paulson, got down on his knees in front of Nancy Pelosi,
the Speaker of the House of Representatives, and begged her not to block the plan"
BBC
FT, In depth, Lehman: the aftershock
Click
Lehman Brothers och eurokrisen
Om man gör anspråk på att förstå politikens utveckling måste man äga förmågan att ställa sig mitt i de virvlar som fem krafter skapar tillsammans.
Det är med andra ord fullt möjligt att vara världsledande inom nationalekonomi, bankväsendet eller finanssystemet,
och ändå göra bedömningar som inte hamnar i närheten av det facit som verkligheten småningom erbjuder.
Roland Poirier Martinsson, Kolumn SvD ledarsida 7 november 2011
När Lehman Brothers ansökte om konkurs var en vanlig reaktion bland svenska finansmänniskor att händelsen var oväntad och obegriplig. Varför räddades inte Lehman av det politiska systemet, allt annat var ju ekonomiskt vansinne? Jag blev förvånad. Min egen bedömning hade nämligen varit den motsatta, att det varit osannolikt att staten skulle rädda Lehman. Hur kunde vi nå så olika slutsatser?
Hösten 2008 bestod i en serie kraftmätningar mellan de krafter som avgör politiska beslut i demokratiska länder: folkets tolkning av skeendet, politikernas manövrering, experternas rekommendationer, mediernas narrativ och det enskilda landets politiska ramverk och traditioner.
How to save the eurozone
Teaching investors a lesson is a wish not a policy.
US policymakers were applauded for about 12 hours for their willingness to let Lehman go bankrupt.
Lawrence Summers, Financial Times, 18 July 2011
Why 9/15 changed more than 9/11
Two years have elapsed since the collapse of Lehman Brothers
triggered a global financial crisis and provoked fears of a new Great Depression.
Gideon Rachman, FT September 13 2010
U.S. regulators did not grant Lehman Brothers the same assistance as its competitors,
knocking out the possibility of an orderly unwind of the firm and aggravating the global crisis,
former Lehman Chief Executive Dick Fuld said
CNBC 1 September 2010
Fuld focused on Sunday, Sept. 14, 2008, when he said Lehman was mandated by government regulators to file for bankruptcy before the Asian markets opened the next day.
That same Sunday, the Fed expanded for investment banks the types of collateral that would qualify for borrowings from its discount window, Fuld said.
Bernanke also said it was impossible for the Fed to rescue Lehman Brothers from bankruptcy in 2008
because the Wall Street firm lacked sufficient collateral to secure a loan.
Lehman's former chief executive told the panel a day earlier that the firm could have been saved, but regulators refused to provide help.
CNBC 2/9 2010
Former Treasury Secretary Hank Paulson admitted that saying Lehman Brothers would not get a government bailout was a ploy in the negotiations
His new book on the financial crisis,
"On the Brink: Inside the Race to Stop the Collapse of the Global Financial System."
CNBC Feb 2010
Basel 3
The Basel regime (European and American banks use either version 1 or 2) represents a monumental, decades-long effort at perfection, with minimum capital requirements carefully calculated from detailed formulae.
The answers were precisely wrong.
Five days before its bankruptcy Lehman Brothers boasted a “Tier 1” capital ratio of 11%, almost three times the regulatory minimum.
The Economist print Jan 21st 2010
Bankers had cashed in before the music stopped
In 2000-07, the top five executives at Bear and Lehman pocketed cash bonuses exceeding $300m and $150m respectively
Lucian Bebchuk, Alma Cohen and Holger Spamann FT December 6 2009
The writers are affiliated with Harvard Law School’s corporate governance programme, which issued their study, “The Wages of Failure: Executive pay at Bear Stearns and Lehman 2000-2008”. Although Mr Bebchuk is a consultant to the US Treasury’s office of the special master for Tarp executive compensation, the views expressed should not be attributed to that office
The need to reform pay structures is not, as many have claimed, simply a politically convenient sideshow. Even if the type of incentives given to executives of Bear and Lehman – and others with similar pay structures – were not the cause of risk-taking in the past, they could be in future. Financial institutions, and the regulators overseeing them, should give the necessary priority to redesigning bonuses and equity-based compensation to avoid rewarding executives for short-term results that are subsequently reversed.
Chuck Prince, the former chairman and chief executive of Citigroup
Note that he did not say “if” the music stops but “when”.
Read more here
At Lehman, the top five executives received cash bonuses and proceeds from stock sales
totaling $1 billion between 2000 and 2008,
and at Bear, the top five received more than $1.4 billion,
according to Harvard Law School.
CNBC 23 Nov 2009
Program on Corporate Governance at Harvard Law School
As a result of Lehman’s bankruptcy, millions of people have needlessly lost their jobs, hundreds of thousands of homes have been needlessly repossessed and trillions of dollars, pounds and euros have been needlessly added to the debt burdens of governments around the world.
I repeat that word needlessly because most of these losses would not have happened if Lehman had been supported or wound down in an orderly way.
Anatole Kaletsky, The Times, September 18, 2009
Anyone who believes that stabilising Lehman was financially or politically impossible should note that the US Treasury bailed out the insurance group AIG at far greater public expense 24 hours later, when AIG’s potential failure threatened the survival of J.P. Morgan and Goldman Sachs.
Why a Lehman deal would not have saved us
Niall Ferguson, FT September 14 2009
The critical point is that, like Bear Stearns, Lehman was just an extreme case of a general phenomenon. A relatively small number of very large financial institutions had become dangerously leveraged and were on a fast track to insolvency as their property investments imploded. Reliant on misleading risk-management models, and counting on the vastly over-extended insurer AIG to pay out if their counterparties defaulted, they were like lemmings in a line, going over the cliff one by one – or rather being pushed off by short-sellers.
Många bedömare anser att amerikanska myndigheter gjorde ett misstag när man lät Lehman Brothers gå i konkurs förra hösten.
Pehr G Gyllenhammar, vice ordförande i Rothschild Europe, inte lika säker.
DI 2009-07-15
I fallet med Lehman Brothers kan det i stället ha varit så att bankens kollaps faktiskt fick amerikanska aktörer att inse allvaret i situationen.
Årets vändpunkt var förmodligen Bush-administrationens beslut
att inte rädda investmentbanken Lehman Brothers.
DN 2008-12-30 Erik Ohlsson
Klockan 18.00 sitter närmare trettio kostymklädda män runt ett ovalt bord i ett konferensrum på bottenvåningen i Fed-byggnaden. De har samtliga en plats i finansvärldens "Vem är det". Här finns bland andra Jamie Dimon, vd för JP Morgan, John Thain, hans kollega på Merrill Lynch och Ken Lewis, vd för Bank of America. Henry Paulson sitter i mitten och har Christopher Cox, chef för USA:s finansinspektion SEC bredvid sig. Mittemot sitter Timothy "Tim" Geithner, chef för Feds New York-avdelning. Det är tyst i rummet, sånär som på tunnelbanan som bullrar fram alldeles under fastigheten och får rummet att vibrera. Paulson tar till orda och säger med lidelse och eftertryck att det inte kommer att erbjudas någon statlig hjälp till Lehman.
Carl Bildt vill lägga ned det svenska generalkonsulatet i New York.
Det vore bättre affär att söka lämpliga New York-advokater som mot vinstandel är beredda att
väcka talan mot amerikanska staten med krav på skadestånd för »gross negligence« i Lehman-konkursen.
Tomas Fischer, Fokus 12 juni 2009
The era that defined Wall Street is finally, officially over. Michael Lewis December 2008 Issue
Michael Lewis, who chronicled its excess in Liar’s Poker, returns to his old haunt to figure out what went wrong.
Liar’s Poker
Tuesday, October 9, 2007 started as a nice day in New York City.
A lovely early fall day, with the temperature still a balmy 80° at 2:00 in the morning. By evening, though, the temperature had dropped twenty degrees, the clouds had rolled in, there was thunder and rain.
As with the weather, there were some hints of trouble here and there on Wall Street. But all in all, things could not have seemed better. Little did we know, the stormy end of 10/9/07 signaled a very large bubble that had just popped.
That was the day when the Dow Jones Industrial Average hit its historic peak.
From there, it was all downhill -- slowly but steadily at first, and then violently after last August -- until the Dow bottomed (for now) on March 9 of this year. Over that span, the index lost 54% of its value.
During the late, great housing boom, interest rates were at microscopic levels, while bankers were encouraged to grant home loans on little more than a wink and a nudge. In order to inflate their balance sheets, those bankers resorted to all sorts of gimmicky, adjustable rate mortgages (ARMs), whose common feature was an interest rate that would eventually reset. That is, it would balloon somewhere down the road.
And those most likely to come quickly to grief were the riskiest borrowers, who held loans known as “subprime.”
For a while, this Ponzi scheme even worked. But then, as they had to, the ARMs began resetting, and there were defaults. Then more of them. Because at the same time, the housing market was cooling off and the economy was stalling out. More and more people were trapped in a situation where they owed more on their home than they could sell it for.
Many simply mailed their keys to the bank and moved on.
All of this wreaked havoc in the derivatives market.
Financial Crisis Time Line by Federal Reserve Bank of St. Louis
Source: Doug Hornig, Editor, BIG GOLD, Thursday, 28 May 2009
On September 15, 2008, the firm filed for Chapter 11 bankruptcy protection.
The filing marked the largest bankruptcy in U.S. history.Lehman Brothers
From Wikipedia, the free encyclopedia
Lehman Brothers:
The Rise and Fall of Lehman Brothers.
A History that Goes Beyond the Great Depression.
Dr Housing Bubble September 15th, 2008
Explaining the fall of Lehman Brothers
Monday, September 15th 2008, 1:34 PM
http://www.nydailynews.com/money/2008/09/13/2008-09-13_explaining_the_fall_of_lehman_brothers.html
Financial Times in depth
Lehman Brothers i konkurs
DI 2008-09-29 14:39
DATUM 2009-03-31
TALARE Riksbankschef Stefan Ingves
PLATS Nationalekonomiska föreningen, Stockholm
När den amerikanska investmentbanken Lehman Brothers i september förra året tvingades ansöka om konkursskydd, fick det omfattande återverkningar över stora delar av världen. Den globala finanskrisen eskalerade, och även de svenska bankerna påverkades i allt större utsträckning. När förhållandena på de globala finansmarknaderna försämrades, ökade kreditriskpremierna generellt. För de låntagare – banker eller länder – som bedömdes vara mest riskfyllda, ökade premierna mer än för andra. En process för att dra ner exponeringarna och minska skuldsättningsgraden startade bland banker och andra finansiella institut världen över. Den snabbt minskande utlåningen förstärkte tillbakagången i den globala konjunkturen. Nedgången i den ekonomiska aktiviteten spädde i sin tur på utvecklingen med kraftiga fall i tillgångsvärden och ökade kreditförluster för bankerna. Det uppstod vad vi kan kalla en ond spiral i världsekonomin, där den finansiella oron förstärkte den realekonomiska försvagningen och vice versa.
”Bortset från frågan om Lehman skulle ha räddats eller inte, den verkliga frågan är: varför gjordes inte mer mellan Bear Stearns bailout och Lehmans död för att skydda systemet från den risk som Lehman uppenbarligen utgjorde?”
David Einhorn
Maybe it was errors at the US Treasury, particularly the decision to let Lehman fail, that triggered today’s panic.
Martin Wolf, FT, October 7 2008
Efter Lehman Brothers konkursansökan i mitten av september ströps kreditflödena.
Ingen hade väntat sig att en så betydande bank kunde fallera och oron steg för att fler aktörer skulle hamna i en liknande situation.
Utlåningen mellan världens banker upphörde nästan helt.
Stefan Ingves, DN Debatt 31/12 2008
Why not increase your buying power by borrowing 30 times your actual capital, as Lehman Bros. did before its collapse,
when you could borrow at an interest rate below the inflation rate, thus ensuring that, in real terms,
you paid back less than you borrowed? After all, the bull market, fueled by this borrowing, virtually guaranteed a profit.
Jim Jubak 2008-10-31
Let me tell you why I think we're looking at something other than a normal recession and what that means for investors.
Recessions are a normal part of the capitalist business cycle. Recessions wash out excesses in the system by shaking out inefficient companies, thus clearing the way for new competitors, and they work to keep supply and demand in sync over the long term.
In the past 50 years, we've had recessions (or recessionlike economic downturns) in 1969-70, 1973-75, 1980-82, 1990-91 and 2001.
The standard medicine for a recession is more government spending on infrastructure (roads and bridges), an extension of unemployment benefits to prop up demand (and relieve suffering), grants to cities and states so they can keep spending and not add to the recession with their own set of cutbacks, and interest-rate cuts.
However, the amount of money Congress is talking about -- and the amount in the first stimulus package (remember those checks that some of us got?) -- is small compared with the amount that the credit crunch has taken out of consumer buying power. Add to that the flip side of the wealth effect -- people spend less when their houses and stock portfolios are worth less -- and you can see why this recession is a lot more likely to look like the long recessions of 1973-75 and 1980-82 than the blink-and-they're-over recessions of 1990-91 and 2001.
As for interest-rate cuts, the Federal Reserve has already cut the federal funds rate to 1%. However, with the financial markets recovering but still ruled by fear, low rates from the Fed are largely irrelevant.
Ingen västerländsk bank vill ligga ute med pengar över årsskiftet. För en bank som vill låna pengar i tre månader eller längre finns det därför snart ingen kvar att låna av. Därför tvingades Riksbanken i går gå in och förse de svenska affärsbankerna med tremånaderslån på upp till 60 miljarder kronor. Bankerna i flera länder får allt svårare att finansiera sig långfristigt. Konkursen i Lehman Brothers och oron kring krispaketet i USA gör att de som har pengar drar sig för att låna ut dem.
If September 11, 2001 was the day that we had to reassess our ideas about America's role in world politics,
September 15, 2008, the day Lehman Brothers went bankrupt, may well be remembered as the day we had to reassess our ideas about America's role in the world economy.
Anne Applebaum, Daily Telegraph, 28/9 2008
September 11 inspired a national display of unity: Americans mourned together, waved flags together, supported their politicians' attempts to come up with a proper response
September 15, by contrast, divided Americans, immediately and bitterly.
I don't think there's been such a torrent of abuse lobbed at Wall Street since the 1930s. "Greedy" was the nicest thing being said about the "speculators" and "asset-strippers" who are reckoned to have caused the whole mess.
The fury reached a pinnacle on Friday when Congress suddenly rebelled and refused to rubber-stamp the proposed $700 billion deal. Surely the climax of the day, and possibly the low point in the eight years of the Bush administration, was the moment when the Treasury Secretary, Henry Paulson, got down on his knees in front of Nancy Pelosi, the Speaker of the House of Representatives, and begged her not to block the plan.
It's that cataclysmic, that decisive, that irreversible.
Since the collapse of Bear Stearns just over a year ago, the government has bailed out financial institutions whose failures threatened the broader financial system
(with the exception of Lehman Brothers).
LEE C. BUCHHEIT and DAVID A. SKEEL Jr. NYT May 18, 2009
In explaining this approach, federal regulators have said that they lack the tools to prevent disorderly failures of such institutions. Bailouts have been the only alternative to bankruptcy filings that can have dangerous effects on the rest of the economy.
But why not adopt an approach that would, where necessary, allow the controlled failure of a major financial institution?