Documentation of a minor disruption: Lehman won’t return “billions” of frozen prime-brokerage assets “in the short term,” said PricewaterhouseCoopers, administrator for the Lehman bankruptcy. Meanwhile, several hedge funds are planning to sing the Bono phrase from “Do They Know It’s Xmastime?”* to their cohorts at Morgan Stanley: Hedge funds that account for less than 10 […]

If Barclay’s had bought Lehman over last weekend, would the Fed still have (needed to) intervened in the case of AIG? Discuss amongst yourselves.

Unlike Fannie and Freddie, AIG was royally and truly doomed. The Fed tells us so: In unusual and exigent circumstances, the Board of Governors of the Federal Reserve System, by the affirmative vote of not less than five members, may authorize any Federal reserve bank, during such periods as the said board may determine, at […]

Let’s stipulate what “everybody knows”: There are some assets in the capital markets, many of which are mortgage-related, that were seriously overvalued over the past several years. Many of the others are Credit-related (CDS and CDOs and the like). Most of the two asset types listed above are reasonable concepts that, if they are commoditized, […]

The Yahoo! headline says most of it: GMAC slashing workforce; reducing mortgage lending. I discussed the GMAC problems at Marginal Utility almost eighteen months ago. Things haven’t gotten much better since then. But some of the Mortgage Industry players have changed partners: Lender GMAC Financial Services said Wednesday it will close all of its 200 […]

The traditional annual list of Party Schools now has a jump-start. In no particular order, except the way CNN listed them: DukeDartmouthOhio StateSyracuseTuftsColgateKenyonMorehouseMiddlebury CollegeRhodes College The reasoning is such that Only the Current Attorney General could love: “This is a law that is routinely evaded,” said John McCardell, former president of Middlebury College in Vermont […]

My Loyal Reader sends this link, with this pull quote: “They had four major and respected law firms advising them, as well as Lazard,” said Markel. “And all of them, all of them were advising the board that there was zero value in a bankruptcy for shareholders as well as losses to creditors.” When are […]

The editors of the WSJ agree with Brad DeLong that the Fannie/Freddie problem is that their short-term cash flows may be(come) impaired: The most immediate danger is that investors will shrink from rolling over the debt of the two companies, leading to a run a la Bear Stearns….With so much on the line, we’ve been […]

John Carney at Dealbreaker notes the official reason the White House prefers that the government takeover Fannie Mae and Freddie Mac: The reason the Bush administration is leaning toward bringing Fannie Mae and Freddie Mac into conservatorship rather than backstopping the two home mortgage companies is that concern about moral hazard problem. Bailing out Fannie […]

Fed values Bear Stearns assets at a level where it has only cost them $100,000nothing—so far. (Indeed, there’s a $50,000 “buffer” left.) Strangely, the scuttlebutt in the market yesterday was that the valuation should be around $24 billion. Or at least that’s how I read this paragraph: If the portfolio’s value were to drop to […]