Bailouts and buyouts

[cjsmith]

Bear Stearns got a government-orchestrated purchase.
Fannie and Freddie got a Federal takeover.
Merrill Lynch got a government-orchestrated purchase.
"The free ride is over", people said as Lehman was left out to hang.
But today AIG got an $85 billion Federal bailout.

What's with Lehman? Did Dick Fuld piss off Henry Paulson or something?

Comments

[greendalek.livejournal.com]

Oh come now! Centralized banking is the Way Of The Future, comrade. We must to be protectink our revolution, da?

[cjsmith.livejournal.com]

Yeah, I'm not exactly sanguine about all this.

[greendalek.livejournal.com]

I'm wondering if it'll be Obama or McCain who ultimately announces the first 5-year plan and declares farm/factory collectivization.

[cjsmith.livejournal.com]

I've got my guess on that one. We can both open our sealed envelopes in a year or two.

I admit I feel a definite edge of "I'm spending my savings before it all gets taken away." (Or simply vanishes.)

[roseembolism.livejournal.com]

Yay! The economy's collapsing! LET'S GO SHOPPING!

[530nm330hz.livejournal.com]

Lehman wasn't Too Big To Fail. Turns out AIG is. The interesting question is whether the AIG bailout will leave shareholders (including me) with anything but scrap paper, or whether it's just enough of a bailout to allow for an orderly unwinding of commitments to every other financial institution in existance.

[cjsmith.livejournal.com]

Bear and Merrill were both bigger than Lehman?

[530nm330hz.livejournal.com]

It's not just the size, it's how much B2B stuff they do, rather than B2C. Bear was a clearinghouse for a large percentage of inter-institutional trades; if they'd gone under the whole financial system would have been frozen for a week or two.

I don't know the deal with Merrill but I think in this case it was more a question of Merrill taking advantage of a way out before things actually reached the acute crisis stage.

[cjsmith.livejournal.com]

Ahh, so part of it is how tied in they are to the other surviving linchpins?

I do know Lehman had some offers earlier in the summer and turned them down, thinking they could do better. Guess they lost that gamble.

[bjarvis.livejournal.com]

It's largely a matter of scale. Lehman was one of the smallest of the Wall Street "biggies," considerably smaller than Fannie, Freddie or AIG.

Gov't-orchestrated purchases have happened regularly for years; we just don't tend to notice them because, frankly, the media didn't think they were news-worthy. Now, every time Paulson farts, it's headline news.

Obligatory disclosure: I'm working on my exit from Fannie Mae currently. :-(

[cjsmith.livejournal.com]

OK, scale is one piece I know little about.

If you're heading out of Fannie Mae, you probably know a LOT more of this landscape than I do.

[billeyler.livejournal.com]

I've JUST started studying up on this, but all the others seem to have vast amounts of foreign creditorship ties that can't be severed or somehow if total failure happens the overall economic scenario is liable to topple. Or some key person in Lehman Brothers could have just pissed someone high ranking in the government off, as you said.

[cjsmith.livejournal.com]

So one key piece might be that Lehman was more domestic in focus?

[chiefted]

Actually worried about the next "one" to fall. I have been hearing and reading stuff about WAMU.

Though you could take this out further.

Chrysler got a loan.
Pan Am...not so much

[cjsmith.livejournal.com]

Yeah, I have too. All the littler guys are shaky when the big guys quake. All of this will be interesting to watch. (My cynical side adds "...if you live on enough land to grow food".)

[chiefted]

and of course I have no land what so ever.

Maybe it is time to move to Canada.

totally OT

[dawnd.livejournal.com]

"Someone" is right--that's a damn fine coat, and you look damn fine in it. Also, I <3 men in kilts. :^D

Re: totally OT

[chiefted]

Um...Thank *S*

[ladycelia.livejournal.com]

There's a WAMU near where I work--there was what appeared to be a run on it the other day. You couldn't have gotten another car in their lot with a crowbar.

[chiefted]

Eeek!

Other than my old Credit Union, WAMU is the first bank I have liked in a long time because of the customer service.

[roseembolism.livejournal.com]

I've beenn worrying about WaMu for a couple weeks; if it goes down, I'll be royally pissed. Figures the first bank that gave us decent service would implode.

[dcart.livejournal.com]

It doesn't seem to be getting as much press, but there are still several other large banks that are looking at buying Lehman. Barclay's is supposedly the likely contender. Lehman can keep functioning for a while under bankruptcy protection while that all gets worked out. As someone else said above, Lehman wasn't quite "too big to fail".