Bear Stearns Redux this Weekend
Looks like the Fed and Treasury are also arranging the sale of Lehman Brothers. When they subsidized the sale of Bear Stearns on March 16 to JP Morgan Chase, JP Morgan walked away with implicit guarantees against bond portfolio losses, and shocked Wall Street the following Monday. When they arrange this sale, it will be old hat. Expect the market to react positively as the government continues to absorb the mounting losses to the benefit of the financial industry. WAMU is next.
Update: 9/12/08 10:45 ampdt Paulson is adamant about Fed not backstopping a Lehman deal like it did with Bear, so it comes down to a fire sale this weekend. Lehman does have more asset credibility than Bear did with underwriting and advisory strength, so it's attractive to banks like BofA interested in expanding this side of the business. It all comes down to the impact of assuming that uncertain debt.
Update: 9/12/08 10:45 ampdt Paulson is adamant about Fed not backstopping a Lehman deal like it did with Bear, so it comes down to a fire sale this weekend. Lehman does have more asset credibility than Bear did with underwriting and advisory strength, so it's attractive to banks like BofA interested in expanding this side of the business. It all comes down to the impact of assuming that uncertain debt.
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