To Serve the Public

Now here's something with some traction. If you can't trust the Washington Post who can you trust?

The Fed and Treasury are reported to be weighing in on the sale of Lehman and are cobbling together a deal 'before Asian markets open on Sunday.'

Sounds hauntingly familiar, like the Bear Stearns bail out. Probably won't cost the a dime as well.

Little Lehman, happy at last? Let's hope so.

Who's next? Plenty for everybody (on the list).

Hank and Ben are going to serve the public. Medium well.


U.S. Government Assisting in Sale of Lehman Brothers
By David Cho and Heather Landy
Washington Post
Thursday, September 11, 2008; 5:40 PM

The Treasury Department and the Federal Reserve are helping Lehman Brothers put itself up for sale. The details are not finalized, but sources familiar with the matter say the purchase is expected to be completed and announced this weekend before Asian markets open Monday morning.

The Fed and Treasury are talking to a wide range of firms and examining multiple scenarios for the sale of the venerable investment brokerage. (Give us a "B", give us an "A", give us a "C", give us a "K".... BACKSTOP! What do we want? BACKSTOP!)

Lehman Brothers, which had been anxious to show it could weather the credit crisis that contributed to the firm's $3.9 billion third-quarter loss, said Wednesday that it would sell a majority stake in its investment-management division, slash its dividend and spin off about $30 billion of real estate assets.

The announcement did little to calm investors' concerns that Lehman, the smallest of the four major Wall Street investment banks, might suffer the same fate as former rival Bear Stearns, which was acquired by J.P. Morgan Chase in a deal regulators brokered in March after a bank run that shook the securities industry.

Lehman's share price fell nearly 40 percent to $4.22 at the end of trading today, continuing a precipitous fall from more than $60 a share as of February.

Goldman Sachs Group reduced its rating on the company, with one analyst saying that the restructuring "fell short of what was necessary," the Bloomberg news service reported, while Moody's Investor Services argued that the firm faced a cut in its credit rating unless it quickly enters a "strategic arrangement" with a stronger partner.

During a conference call with Lehman executives yesterday, analysts pressed for assurances that the $5.6 billion of write-downs that the firm disclosed for the quarter ended Aug. 31 -- primarily for declines in the value of assets tied to residential mortgages -- sufficiently reflected the severity of the troubles in the real estate market. The concern demonstrated the skepticism that remains even after last weekend's federal bailout of government-sponsored enterprises Fannie Mae and Freddie Mac, which play a vital role in supporting the mortgage and housing markets.

"There's still an element of doubt in terms of confidence of the financial players, and that's not going to go away just with the bailing out of Bear Stearns and the bailing out of the GSEs," said Michael Kastner, managing director of fixed income at Sterling Stamos Capital Management in New York. "What we're going to need to see is at least one quarter where the financial institutions don't show write-downs and do show profits and an ability to grow their business."