A note of caution for those with deposits in US Banks

More details on the Lehman loss:

Lehman Plans Neuberger Auction, Real Estate Spinoff (Update3)

By Yalman Onaran
https://teakdoor.com/images/smilies1/You_Rock_Emoticon.gif
https://teakdoor.com/images/smilies1/You_Rock_Emoticon.gif

Sept. 10 (Bloomberg) -- Lehman Brothers Holdings Inc., reporting the biggest loss in its 158-year history

From:

http://www.bloomberg.com/apps/news?p...fDk&refer=home

Despite the suggested safety net of the FED, I, for one, would not risk placing funds with Lehman any time soon...

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Originally Posted by bkkandrew

This MoFo doesn't get bullied and that is why you are crying in your beer.

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how many fights have you been into in the last 48 hours with how many members ? quite a few I suspect :)

^Nope, just you and the senile fool.

Anyway, back on topic:

More `Chaos' Ahead for U.S. Banks, Investor Jim Rogers Predicts

By Lynn Thomasson and Betty Liu

Sept. 10 (Bloomberg) -- U.S. financials face more ``chaos'' as the credit market worsens, investor Jim Rogers predicted.

``Balance sheets of many of these financial institutions are still terribly impaired and there are more problems to come,'' he said during a Bloomberg Television interview. ``We had the worst credit bubble in the history of the world. You don't clean that out in a year or two or three.''

The chairman of Singapore-based Rogers Holdings said he's still betting against U.S. investment banks, even after ending his short sale of Citigroup Inc. a few weeks ago because the bank's stock fell too low. Citigroup shares closed at $14.56 on July 15, the lowest since 1997. The world's largest bank by assets has rallied 25 percent since then.

Rogers also called the government takeover of Fannie Mae and Freddie Mac ``outrageous'' and said the largest U.S. mortgage finance companies should have declared bankruptcy.

``I'm happy some people will be able to get lower mortgages, but I shouldn't have to pay for it,'' he said. Fannie Mae and Freddie Mac executives aren't ``turning in their Maseratis when they're asking us to bail them out.''

Complete article here:

Bloomberg.com: Worldwide

The news about how sour the Freddie/Fannie deal actually is will start to seep out over the coming days...

US BECOMES WORLD'S BIGGEST COUNCIL ESTATE https://teakdoor.com/images/imported/2008/04/40.jpg https://teakdoor.com/images/smilies1/You_Rock_Emoticon.gif AMERICA became the world's largest council estate last night after the US government bought all the houses.

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Fudd has underpinned US mortgages for 40 years

With the nationalisation of the country's biggest mortage companies, Washington can now begin painting all the front doors the same colour and filling the gardens with rubbish.

Treasury Secretary Hank Paulson said: "By taking Kenny G and Elmer Fudd into state control the US government is now the second biggest owner of third rate homes after Liverpool City Council."

He added: "Since the Pilgrim Fathers set foot on Plymouth Rock, the American dream has been about working hard and owning your own home until the government suddenly turns into a bunch of communists and buys up all the mortgages.

"Rest assured we will choose a sickly blue-green colour for your front door and inject damp into the walls in time for Christmas."

Mr Paulson continued: "Now we all know that when the government owns your home you have an immediate and irresistible urge to use it as a one big toilet.

"All I would say is: do at least try to use the lavatory, but if not, then please sweep all your droppings into the corner of the room and then cover them in sawdust."

Meanwhile economist Tom Logan warned: "If all Americans are now effectively council tenants then it's only a matter of time before they become fat, ignorant bastards who sit around all day eating huge bags of crisps and watching X-Factor."

US BECOMES WORLD'S BIGGEST COUNCIL ESTATE - The Daily Mash

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Originally Posted by bkkandrew

Meanwhile, the collective sum of all US banks are now technically bust/bankrupt/insolvent/skint/brassic/broke/penniless/short of a bob or two (select your favorite...

See:

FRB: H.3 Release--Nonborrowed Reserves

They now actually have a NEGATIVE sum of money in reserve. Scary...

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....has no adverse implications for the availability of reserves to the banking system.

Quote:

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Originally Posted by Butterfly

Most central banks have a built-in rescue system, it's called the window discount rate, basically a "special discount" rate for banks to "borrow" reserves from central banks,

That UK bank with the bank run a few months ago did exactly that,

Yes it's a disaster, and the news are quiet about it for good reasons, the last thing you need is a bank run as this would collapse the whole system, like it did in the 1920s

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The 'discount window' has nothing to due with "rescue" it is used in the day to day operation of the US banking system. There is nothing "special" about the rate it charges. The term 'discount' comes from that fact that the borrowing bank puts up a certain amount of assets as collateral for the loan and receives less than that amount as the loan. Thus the assets are "discounted"

This whole subject is quite technical and can easily be misunderstood by the gereral public.

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Originally Posted by who

The 'discount window' has nothing to due with "rescue" it is used in the day to day operation of the US banking system.

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I think you are confusing the Fed Funds rate and the discount window,

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Originally Posted by Wiki

This rate is generally set at a rate close to 100 points above the target federal funds rate. The idea is to encourage banks to seek alternative funding before using the "discount rate" option

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The discount window is an instrument of monetary policy (usually controlled by central banks) that allows eligible institutions to borrow money from the central bank, usually on a short-term basis, to meet temporary shortages of liquidity caused by internal or external disruptions.

It is distinct from the federal funds rate or its equivalents in other currencies, which determine the rate at which banks lend money to each other. In recent years, the discount rate has been approximately a percentage point above the federal funds rate (see Lombard credit). Because of this, it is a relatively unimportant factor in the control of the money supply and is only taken advantage of at large volume during emergencies.

Discount window - Wikipedia, the free encyclopedia

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Originally Posted by Butterfly

Quote:

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Originally Posted by who

The 'discount window' has nothing to due with "rescue" it is used in the day to day operation of the US banking system.

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I think you are confusing the Fed Funds rate and the discount window,

Quote:

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Originally Posted by Wiki

This rate is generally set at a rate close to 100 points above the target federal funds rate. The idea is to encourage banks to seek alternative funding before using the "discount rate" option

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The discount window is an instrument of monetary policy (usually controlled by central banks) that allows eligible institutions to borrow money from the central bank, usually on a short-term basis, to meet temporary shortages of liquidity caused by internal or external disruptions.

It is distinct from the federal funds rate or its equivalents in other currencies, which determine the rate at which banks lend money to each other. In recent years, the discount rate has been approximately a percentage point above the federal funds rate (see Lombard credit). Because of this, it is a relatively unimportant factor in the control of the money supply and is only taken advantage of at large volume during emergencies.

Discount window - Wikipedia, the free encyclopedia

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The discount window is an instrument of monetary policy that allows eligible institutions to borrow money from the central bank to meet temporary shortages of liquidity.
The interest rate charged on such loans by a central bank is called the discount rate.

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Originally Posted by who

The interest rate charged on such loans by a central bank is called the discount rate.

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Yes, it is and I stand by what I said below, that is a "special" rate (and discounted). The collateral assets you mentioned are not discounted as they are not sold, they just serve as collateral, usually pre-approved by the Fed. I think you are confusing US Treasury Zero Coupon bonds, a short term instrument often used as collateral in complex edging operations by market participants, including banks. The Fed is NOT the US Treasury.

Quote:

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Originally Posted by Butterfly

Most central banks have a built-in rescue system, it's called the window discount rate, basically a "special discount" rate for banks to "borrow" reserves from central banks,

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until 2003 the rate used to be "especially" low (that is fixed by the Fed and usually below the Federal Fund rate) but what I didn't know is that the rates were restructured in 2003 and are now 100bp above the Federal Fund rate.

More here: FACTBOX-What is the Fed's discount window | Markets | Bonds News | Reuters

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WASHINGTON, Aug 10 (Reuters) - The U.S. Federal Reserve said on Friday it was providing liquidity as needed to keep keep financial markets operating normally. It also said its discount window was available as a source of funding.

The primary discount rate, currently at 6.25 percent, is one of the U.S. central bank's monetary policy tools and provides a borrowing safety valve for qualifying institutional borrowers.

The primary discount rate is 1 percentage point above the target for federal funds rate, which is Fed's benchmark short-term interest rate.

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Another source here: Real Time Economics : Explaining the Discount Window

Quote:

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The discount window is a channel for banks and thrifts to borrow directly from the Fed rather than in the markets. Until a few years ago, the discount rate was set below the fed funds rate and loans were subject to numerous conditions.

Banks were reluctant to access the window because it was associated with a stigma usually reserved for distressed banks. A few years ago the Fed overhauled the discount window to try and alleviate that stigma; the rate was then set one percentage point above the funds rate and subject to far fewer conditions. In spite of that, discount window borrowing has remained paltry.

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Hardly used for day to day operations as you mentioned, at least until the rate were restructured in 2003, so maybe banks are less reluctant to borrow now. With the latest crisis, they surely did use it extensively. Not a good sign though and definitely not normal.

The Federal Reserve Bank of New York held an emergency meeting Friday night with top Wall Street executives to discuss the future of venerable firm Lehman Brothers Holdings Inc. and the parlous state of U.S. financial markets.

The meeting, which began at 6 p.m., was called by the New York Fed in an attempt to find a solution to the problems plaguing Lehman. The group, which consisted of the heads of most major financial institutions, is expected to meet throughout the weekend to see if it can agree on some way to rescue the ailing firm, according to a person familiar with the matter.

Business - WSJ.com

Here we go again. I wonder which firm will be lent some money to prop up Lehman?

Capital fears for AIG and Washington Mutual


By James Quinn Wall Street Correspondent

Last Updated: 12:00am BST 13/09/2008





American International Group, the world's largest insurer, is under pressure to clarify its capital position, amid concern that its balance sheet is not strong enough, as other financials began to feel the pain meted out earlier in the week to Lehman Brothers.

Beleaguered American savings bank Washington Mutual (WaMu) is understood to have told potential buyers it is not interested in being taken over in spite of constant questions about its capital adequacy.

AIG, best known in the UK as the shirt-sponsor of Manchester United, is believed to be considering scheduling a conference call with Wall Street analysts on Monday morning to confirm its position and assuage worried investors.

The call, if it happens, will come after ratings agency Standard & Poor's said last night that it may cut the insurer's credit rating by up to three notches. AIG's shares ended yesterday down 30pc.

Continued here:

Capital fears for AIG and Washington Mutual - Telegraph

Quote:

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Originally Posted by bkkandrew

Here we go again. I wonder which firm will be lent some money to prop up Lehman?

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Ignorant question here by me:

I know some firms and even Dubai pumped in helicopter money to save some of the investment houses.

But if nobody comes in to pump up Lehman brothers, what the big deal?

Would the fall of Lehman hurt anyone in the greater economy (in addition to those that hold it's plunging stock)?

^The couterparties to any investment bank would be hurt badly by any outright insolvency. Bank A owes money to bank B, which has lent it to bank C. Bank C goes bust, leaving bank A and B in trouble. Its called contagen. One large failure could bring down the entire banking system. It was broadly known that if Bear had gone bust properly they would have taken JP Morgan Chase with them.

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Originally Posted by bkkandrew

Here we go again. I wonder which firm will be lent some money to prop up Lehman?

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i defer to your knowledge and experience, but i would think that goldman would be a likely choice....that is if they're books are as clean as they say they are.

what a country......profits for banks are privatized and their losses socialized.

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Originally Posted by bkkandrew

It was broadly known that if Bear had gone bust properly they would have taken JP Morgan Chase with them.

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bear is lucky they fell first. they're isn't going to be anyone around to save merril if/when they go under.

Quote:

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Originally Posted by Butterfly

Quote:

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Originally Posted by who

The interest rate charged on such loans by a central bank is called the discount rate.

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Yes, it is and I stand by what I said below, that is a "special" rate (and discounted). The collateral assets you mentioned are not discounted as they are not sold, they just serve as collateral, usually pre-approved by the Fed. I think you are confusing US Treasury Zero Coupon bonds, a short term instrument often used as collateral in complex edging operations by market participants, including banks. The Fed is NOT the US Treasury.

Quote:

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Originally Posted by Butterfly

Most central banks have a built-in rescue system, it's called the window discount rate, basically a "special discount" rate for banks to "borrow" reserves from central banks,

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until 2003 the rate used to be "especially" low (that is fixed by the Fed and usually below the Federal Fund rate) but what I didn't know is that the rates were restructured in 2003 and are now 100bp above the Federal Fund rate.

More here: FACTBOX-What is the Fed's discount window | Markets | Bonds News | Reuters

Quote:

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WASHINGTON, Aug 10 (Reuters) - The U.S. Federal Reserve said on Friday it was providing liquidity as needed to keep keep financial markets operating normally. It also said its discount window was available as a source of funding.

The primary discount rate, currently at 6.25 percent, is one of the U.S. central bank's monetary policy tools and provides a borrowing safety valve for qualifying institutional borrowers.

The primary discount rate is 1 percentage point above the target for federal funds rate, which is Fed's benchmark short-term interest rate.

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Another source here: Real Time Economics : Explaining the Discount Window

Quote:

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The discount window is a channel for banks and thrifts to borrow directly from the Fed rather than in the markets. Until a few years ago, the discount rate was set below the fed funds rate and loans were subject to numerous conditions.

Banks were reluctant to access the window because it was associated with a stigma usually reserved for distressed banks. A few years ago the Fed overhauled the discount window to try and alleviate that stigma; the rate was then set one percentage point above the funds rate and subject to far fewer conditions. In spite of that, discount window borrowing has remained paltry.

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Hardly used for day to day operations as you mentioned, at least until the rate were restructured in 2003, so maybe banks are less reluctant to borrow now. With the latest crisis, they surely did use it extensively. Not a good sign though and definitely not normal.

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Regarding paragraph one above:

"special" in relation to what? "discounted" from what? I agree: the collateral is not sold, other wise it would no longer be collateral. Re: Zero Coupon Treasuries: I personally would not refer to 30 year bonds as 'short term'. I am not familiar with "edging" operations. I agree that the Fed is not the Treasury. The Treasury is a federal gov't Department, the Fed is a privately owned corporation.

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Originally Posted by who

Re: Zero Coupon Treasuries: I personally would not refer to 30 year bonds as 'short term'. I am not familiar with "edging" operations.

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US Treasury Bills mature in less than 1 year, usually 6 months and are sold at discount, there are the Zero-Coupon Treasuries, so yes there are short terms,

You might be confused with long term STRIPP, which is the stripping of a long term US Treasury bond by large financial institutions and resold to investors, which is something different and it is not issued by the US Treasury, only the underlying asset is from the US Treasury

So, has the US economy failed as that nutcase BKKA predicated? Fuck, here is an obvious example of a little knowledge is a dangerous thing. Bkka may fool some of you (Like rc) who don't really understand economics since Bkka has learned a few of the words, but Bkka has no real knowledge or analytical ability. He is just a nutcase.

LEH look doomed, Barclays took one look at their books and got on their toes.
Next up is Merril Lynch.

Another week of systemic risk for the Fed to deal with.

^I said a while ago that Lehman going bust 'was a given', but I had never suspected that it might be a proper bankruptcy with no bailout. With only a few hours to go, this is what we are facing!

When I predicted the collapse of the US banking system as we know it and the systemic collapse in the FED, I was waiting for this to spread to Citigroup and had assumed that Lehman and Merrils would be bailed and Citi would prove to be the one too big to bail. It now looks like the FED have decided to circle the wagons now.

Bailouts Will Push US into Depression: Manager

The end result of the global economic slowdown may be the U.S. announcing national bankruptcy as the government cannot afford the bailouts that it promised and the market will not bail out the government, Martin Hennecke, senior manager of private clients at Tyche, told CNBC on Thursday.

"We expect a depression in the United States. We expect a depression, very possibly, also in Europe," Hennecke said on "Worldwide Exchange."

The estimated $300 billion cost of the Fannie/Freddie bailout will probably be considered as a loss that the government will have to take, therefore passing it on to taxpayers, he explained.

"We already have $3 trillion of debt, as far as the U.S. government is concerned. These debt figures across the U.S. economy are rising very sharply."

When the government can no longer pass the United States' "immense debt" on to taxpayers, it will turn to the holders of U.S. dollars, leading to the eventual downfall of the currency, Hennecke said.

"Definitely, it (the dollar) is not a safe place to be invested in, as real inflation is closer to 10 or 11 percent than the actual inflation numbers given by the U.S. government," Hennecke said on "Worldwide Exchange".

Investors should avoid exposure to debt and stay away from leveraging on any investment or asset, including property, Hennecke advised, adding that "banks have been too highly leveraged in the past, private households, everybody."

Hennecke's stock allocations are mainly Asian-based, especially in the Chinese market as the country's government has a large amount of cash and the macroeconomics are fundamentally strong.

He also suggested investing in gold, despite the recent fall in price.

Bailouts Will Push US into Depression: Manager - General * Europe * News * Story - CNBC.com

Wall Street Prepares for Potential Lehman Bankruptcy Filing


By Craig Torres

Sept. 14 (Bloomberg) -- A group of banks and brokers began preparing for a potential Lehman Brothers Holdings Inc. bankruptcy filing today, addressing outstanding trades that the company has in over-the-counter derivatives markets.

Financial firms have started ``netting'' Lehman trades on credit, equity, interest-rate, foreign exchange, and commodity derivatives, according to a statement from the International Swaps and Derivatives Association e-mailed to Bloomberg News.

``ISDA confirms a netting trading session will take place between 2 p.m. and 4 p.m. New York time for over-the-counter derivatives,'' the ISDA said. ``Trades are contingent on a bankruptcy filing at or before 11:59 p.m. New York time, Sunday, Sept. 14, 2008. If there is no filing, the trades cease to exist.''

The announcement came after Barclays Plc, the U.K.'s third- biggest bank, said it abandoned talks to buy Lehman, contending it couldn't obtain guarantees to protect against potential losses at the U.S. securities firm.

Bloomberg.com: Worldwide

Now, when this happens, you know 'its' going to happen, as all counterparties have to work out their 'net' position, i.e. what they owe to and are owed by the bankrupt bank. They can then see if (a) they are themselves bankrupt (quite important), (b) may the necessary report to the SECC, NYSE et al on any loss and (c) prepare to present the claims/payment offers to the liquidators.

So, they are going down. Properly.

I wonder if the Fed will use an interest rate cut ahead of tuesdays announcment as a bone to toss wall street for a few hours?

The statement in full:

ISDA Statement on Lehman Brothers Bankruptcy Trades: Full Text

By Scott Lanman

Sept. 14 (Bloomberg) -- Following is a statement today from the International Swaps and Derivatives Association:

``ISDA confirms a netting trading session will take place between 2 pm and 4 pm New York time for OTC derivatives. Product classes involved are credit, equity, rates, FX and commodity derivatives. The purpose of this session is to reduce risk associated with a potential Lehman Brothers Holding Inc. bankruptcy filing. Trades are contingent on a bankruptcy filing at or before 11:59 pm New York time, Sunday, September 14, 2008. If there is no filing, the trades cease to exist. These trades are subject to a protocol which is being distributed by ISDA (International Swaps and Derivatives Association). Traders should execute the protocol and return to ISDA.''

Taken from:

Bloomberg.com: Worldwide

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Originally Posted by Spin

I wonder if the Fed will use an interest rate cut ahead of tuesdays announcment as a bone to toss wall street for a few hours?

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They did that last time and it worked. Maybe they think that this would be a winner again?

Greenspan gives his two-cents worth:

Greenspan Says Crisis May Be `Once in Century' Event (Update1)

By Vivien Lou Chen

Sept. 14 (Bloomberg) -- Former Federal Reserve Chairman Alan Greenspan said the financial crisis that began with the collapse of the subprime-mortgage market last year ``is probably a once in a century event'' that will lead to the failure of more firms.

``There's no question that this is in the process of outstripping anything I've seen, and it is still not resolved,'' Greenspan said in an interview today on ABC's ``This Week with George Stephanopoulos.'' Greenspan, 82, retired from the Fed in January 2006 after serving for 18 years as chairman.

Treasury and Federal Reserve officials are working on a sale of Lehman Brothers Holdings Inc., the 158-year-old investment bank that reported a third-quarter loss of $3.9 billion. U.S. Treasury Secretary Henry Paulson, who spearheaded a government takeover of mortgage giants Fannie Mae and Freddie Mac last weekend, has said he's reluctant to use Federal funds to rescue Lehman.

``What they are trying to do with Lehman is find a way in which there is no government money involved in this particular set of negotiations,'' Greenspan said. ``If they can't, they have to make a very key decision as to whether they allow it to liquidate or support it,'' he said, adding that he doesn't know enough details to recommend the right move.

In March, the Federal Reserve took on a $29 billion portfolio of mortgage-backed debt and other assets when it brokered the sale of Bear Stearns Cos. to JPMorgan Chase & Co. It also opened up cash loans to investment banks, a safety net unavailable to Bear Stearns.

`Fundamental' Institutions

``There are certain types of institutions which are so fundamental to the functioning of the movement of savings into real investments in an economy that on very rare occasions, and this is one of them, it's desirable to prevent them from liquidating in a sharply disruptive manner,'' Greenspan said.

Asked whether government bailouts should be used to help the auto industry, Greenspan said that would undermine savings and growth of the economy, leading to stagnation.

Shares of American International Group Inc., the largest U.S. insurer, have plunged 46 percent over the past week on concern that the company may be the next big U.S. financial firm after Lehman to fall short of capital.

The federal government took over Fannie Mae and Freddie Mac, the two largest sources of money for U.S. home loans, on Sept. 7, placing them under conservatorship and establishing procedures for buying their senior preferred stock if liabilities exceed assets.

Winners and Losers

``This is a once in a half century, probably once in a century type of event,'' Greenspan said. ``We shouldn't try to protect every single institution. The ordinary cost of financial change has winners and losers.''

Bloomberg.com: Worldwide

^They're certainly short of options now, I can't think what else they could do to calm any chaos might develop. Next deadline is 11.59 which is the latest bankruptcy can be declared? Thats 11am Monday morning Thai time I think.

^Correct.

I think I am going to get a few hours kip now, as I can't see anything else happening for the next six hours. If any last-minute deal gets done it will, indeed, be at the 11th hour.

Quote:

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Originally Posted by bkkandrew

^I said a while ago that Lehman going bust 'was a given', but I had never suspected that it might be a proper bankruptcy with no bailout. With only a few hours to go, this is what we are facing!

When I predicted the collapse of the US banking system as we know it and the systemic collapse in the FED, I was waiting for this to spread to Citigroup and had assumed that Lehman and Merrils would be bailed and Citi would prove to be the one too big to bail. It now looks like the FED have decided to circle the wagons now.

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"systemic collapse in the FED"

What does that mean ?

Bank of America have just announced that like Barclays, they will not do a deal either.

Quote:

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Originally Posted by Spin

I wonder if the Fed will use an interest rate cut ahead of tuesdays announcment as a bone to toss wall street for a few hours?

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I hope not. The greatest danger, in the long run, is always inflation.

Quote:

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Originally Posted by who

Quote:

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Originally Posted by bkkandrew

^I said a while ago that Lehman going bust 'was a given', but I had never suspected that it might be a proper bankruptcy with no bailout. With only a few hours to go, this is what we are facing!

When I predicted the collapse of the US banking system as we know it and the systemic collapse in the FED, I was waiting for this to spread to Citigroup and had assumed that Lehman and Merrils would be bailed and Citi would prove to be the one too big to bail. It now looks like the FED have decided to circle the wagons now.

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"systemic collapse in the FED"

What does that mean ?

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When one entity causes another one to fail due to its own failure.

I was typing fast, more accurately it should have read 'to' not 'in'. I believe that Paulson has now realised that Lehman on top of Freddie/Fannie, on top of Bear will deplete the pot too much and is now drawing back from a bailout.

Quote:

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Originally Posted by bkkandrew

Quote:

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Originally Posted by who

Quote:

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Originally Posted by bkkandrew

^I said a while ago that Lehman going bust 'was a given', but I had never suspected that it might be a proper bankruptcy with no bailout. With only a few hours to go, this is what we are facing!

When I predicted the collapse of the US banking system as we know it and the systemic collapse in the FED, I was waiting for this to spread to Citigroup and had assumed that Lehman and Merrils would be bailed and Citi would prove to be the one too big to bail. It now looks like the FED have decided to circle the wagons now.

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"systemic collapse in the FED"

What does that mean ?

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When one entity causes another one to fail due to its own failure.

I was typing fast, more accurately it should have read 'to' not 'in'. I believe that Paulson has now realised that Lehman on top of Freddie/Fannie, on top of Bear will deplete the pot too much and is now drawing back from a bailout.

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When I try to type fast my 2 fingers begin to ache.

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Originally Posted by Spin

Bank of America have just announced that like Barclays, they will not do a deal either.

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Where did you read/hear that ? I want to know more.

Quote:

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Originally Posted by who

When I try to type fast my 2 fingers begin to ache.

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:rofl:

Quote:

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Originally Posted by who

Quote:

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Originally Posted by Spin

Bank of America have just announced that like Barclays, they will not do a deal either.

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Where did you read/hear that ? I want to know more.

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Sept. 14 (Bloomberg) -- Bank of America Corp. abandoned talks to buy Lehman Brothers Holdings Inc., according to a person with knowledge of the matter, less than three hours after Barclays Plc said it wouldn't buy the faltering investment bank.

Bank of America, the biggest U.S. consumer bank, and Barclays, the U.K.'s third-largest lender, had been among the leading candidates to acquire all or parts of New York-based Lehman.

The two potential bidders pulled out amid a third day of emergency negotiations led by the U.S. Treasury and Federal Reserve, Leigh Bruce, a spokesman for London-based Barclays, said in a phone interview today.

Bloomberg.com: Worldwide

I posted this when I thought that Lehman might be the next to go (in May):

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Back in mid-March when the bank reported, Bear Stearns had collapsed the day before and Lehman was in the market's cross hairs. Lehman posted a $489 million profit, calming investors. But ever since then, investors have questioned those numbers, asking whether the profit was due to some one-time, unrealized gains.

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https://teakdoor.com/us-domestic-issu...tml#post636474

Looks like someones going to have to explain themselves over those numbers. Probably to a Judge.

Bank of America saving Merrills instead?

Bank of America, Merrill Lynch In Merger Talks


By Matthew Karnitschnig, Susanne Craig and Dennis K. Berman
Word Count: 94
Bank of America and Merrill Lynch & Co. Inc. are in merger discussions, according to people familiar with the matter.

The talks come amid a Wall Street scramble to sort out a potential liquidation of Lehman Brothers Holdings Inc.

Bank of America had considered buying Lehman, but when those talks failed to result in a deal, BofA turned its attention to Merrill, which is considered a better fit for the bank.

Much remains uncertain and conditions were fluid.


Free Preview - WSJ.com

Subscription needed for full report.

Dow futures have opened and are -314 points -2.73% at 11144.

Lehman to file for bankruptcy more here

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Also, Schedule 2 TSLF auctions will be conducted each week; previously, Schedule 2 auctions had been conducted every two weeks. In addition, the amounts offered under Schedule 2 auctions will be increased to a total of $150 billion, from a total of $125 billion. Amounts offered in Schedule 1 auctions will remain at a total of $50 billion. Thus, the total amount offered in the TSLF program will rise to $200 billion from $175 billion.

The Board also adopted an interim final rule that provides a temporary exception to the limitations in section 23A of the Federal Reserve Act. It allows all insured depository institutions to provide liquidity to their affiliates for assets typically funded in the tri-party repo market. This exception expires on January 30, 2009, unless extended by the Board, and is subject to various conditions to promote safety and soundness.
Also, Schedule 2 TSLF auctions will be conducted each week; previously, Schedule 2 auctions had been conducted every two weeks. In addition, the amounts offered under Schedule 2 auctions will be increased to a total of $150 billion, from a total of $125 billion. Amounts offered in Schedule 1 auctions will remain at a total of $50 billion. Thus, the total amount offered in the TSLF program will rise to $200 billion from $175 billion.

The Board also adopted an interim final rule that provides a temporary exception to the limitations in section 23A of the Federal Reserve Act. It allows all insured depository institutions to provide liquidity to their affiliates for assets typically funded in the tri-party repo market. This exception expires on January 30, 2009, unless extended by the Board, and is subject to various conditions to promote safety and soundness.

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FRB: Press Release--Federal Reserve Board announces several initiatives to provide additional support to financial markets, including enhancements to its existing liquidity facilities--September 14, 2008

More liquidity - Paulson's hand hard down on the inflation pump.

Also, not good. Not good at all. Section 23A is what prevents the money held by a retail (i.e. high street) bank on behalf of its customers from being pissed away by an investment bank that is part of the same group. Normally an exemption has to be applied for and is subject to strict controls and limits. Now EVERY U.S. bank automatically gets one until January 2009.

This means that Bank of America can happily spend its depositors cash on propping up Merrills. Nice for you to know if you have a deposit account with BoA...:rolleyes: