Daily Archives: September 14, 2008

World’s Largest Banks Create A Fund To Save One Another

DataWe few, we happy few, we band of brothers;
    For he to-day that sheds his blood with me
    Shall be my brother; be he ne’er so vile…  Saint Crispen’s Day Speech.

Ten of the world’s largest banks will form a fund with a value of $70 billion, each putting in $7 billion. The banks are Bank of America (BAC), Barclays (BCS), Citigroup (C), Credit Suisse Group (CS), Deutsche Bank AG (DB), Goldman Sachs (GS), JPMorgan Chase (JPM), Merrill Lynch (MER), Morgan Stanley (MS) and UBS AG (UBS).

Of course, Merrill is gone now, so its share can go to another bank.

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Posted on: September 14, 2008 – 10:26 pm in Banking, , , , , , , , , ,

Paulson Gloats

600pxuscomptrollerofthecurrencysealNo one likes a sore loser and there will be plenty of those among the executives at banks and brokerage firms that will fail or be sold.

A gloating winner is harder to take. The inner pride and satisfaction of winning should be enough. That is why taunting draws a penalty in so many sports.

Henry Paulson could not help himself.

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Posted on: September 14, 2008 – 9:59 pm in Banking, , , , , ,

Merrill Lynch (MER), Sucked Under By Crisis, Is Ruined By The Value Of One Home

Merrill_4Merrill Lynch (MER) is gone, sold to Bank of America (BAC) for $44 billion. That is $29 a share, well below its 52-week high of $79, but above the $17 where it closed on Friday.

Merrill would have opened below $10. The schizophenia caused by the current credit crisis is that great. The brokerage may well have had a balance sheet which would have allowed it to remain independent, but the Lehman (LEH) gone, the doubt was spreading to the next company on the list and short-seller would swamp over the company like leeches.

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Posted on: September 14, 2008 – 9:38 pm in Financial Stocks, , ,

Merrill Lynch (MER) Board May Be About To Approve Bank Of America (BAC) Takeover

Merrill_3The Wall Street Journal is reporting that the board of Merrill Lynch (MER) is meeting to approve a $29 a share takeover offer from Bank of America (BAC).

If the deal closes tonight, Merrill, Lehman (LEH), and Bear Stearns will all have disappeared in a matter of six months.

Douglas A. McIntyre

Posted on: September 14, 2008 – 6:25 pm in Mergers and Buy Outs, , ,

Big Banks Work On Slush Fund To Save Smaller Firms

FedSeveral of the world’s largest banks on working on assembling a $50 billion fund to offer capital to weaker financial companies as firms like Lehman (LEH), Merrill Lynch (MER), and Washington Mutual (WM) face liquidation or sale.

This fund would be added to an increase in capital from the Fed. According to Reuters, "officials at the U.S. Treasury and the Federal Reserve are expected to say they are prepared to be more generous in the Fed’s emergency lending program for commercial and investment banks."

Douglas A. McIntyre

Posted on: September 14, 2008 – 6:17 pm in Banking, , ,

New York Times Reports Lehman (LEH) Will Go Bankrupt

Angrybear_2The New York Times is reporting that Lehman (LEH) will file for bankruptcy protection tonight.

The paper writes that "Lehman will seek to place its parent company, Lehman Brothers Holdings, into bankruptcy protection, while its subsidiaries will remain solvent while the firm liquidates its holdings."

Douglas A. McIntyre

Posted on: September 14, 2008 – 6:03 pm in Brokerage Firms,

Bank Of America (BAC) To Buy Merrill Lynch (MER) For $26 A Share?

Merrill_2The latest rumor in the swirl of news around the probable failure of Lehman (LEH) is that Bank of America (BAC) will buy Merrill Lynch for $26 a share. The most recent information on the deal comes from The Wall Street Journal.

While the $26 is a significant premium to $17 where it closed on Friday, it is well below the $28 where it opened last Monday

Douglas A. McIntyre

Posted on: September 14, 2008 – 5:59 pm in Mergers and Buy Outs, , ,

Pimco’s Gross Sees Market Meltdown

HouseBond king Bill Gross of Pimco believes that a failure of Lehman (LEH) will lead to "the risk of an immediate tsunami.. related to the unwind of derivative and swap-related positions worldwide in the dealer," according to Reuters.

Douglas A. McIntyre

Posted on: September 14, 2008 – 5:20 pm in Economy,

Electronic Arts (ERTS) Walks Away From Take-Two (TTWO)

R218533_855025Take-Two Interactive (TTWO) chairman Strauss Zelnick overplayed his hand. He continued to refuse a buyout bid from larger game company Electronic Arts (ERTS). Now Take-Two shareholders will pay for Zelnick’s error.

According to The Wall Street Journal, "Ever since EA first offered $26 a share for Take-Two in February, the New York-based publisher had rejected EA’s offer as inadequate."

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Posted on: September 14, 2008 – 4:21 pm in Mergers and Buy Outs, ,

AIG (AIG) To Dump Assets To Save Itself

AigAIG (AIG) will sell several divisions to raise the capital it needs to stay independent.

According to The Wall Street Journal the big insurance company "plans to disclose a comprehensive restructuring by early Monday morning that is likely to include the disposal of major assets including its aircraft-leasing business and other holdings."

AIG’s new CEO said he was going to do this some time ago. What took so long?

Douglas A. McIntyre

Posted on: September 14, 2008 – 4:08 pm in Financial Stocks,

Bank Of America (BAC) In Talks To Buy Merrill Lynch (MER)

MerrillConvinced that a Lehman (LEH) Chapter 11 could cause huge losses for other large financial institutions, the weakest players have become desperate to find partners or buyers. According to The Wall Street Journal, Merrill Lynch (MER), its shares pulled into the whirlpool by problems at Lehman, in talks to be bought by Bank of America (BAC).

Before the month is over, several weak companies from Merrill to Washington Mutual (MW) may not longer exist as independent entities.

Douglas A. McIntyre

Posted on: September 14, 2008 – 3:18 pm in Financial Stocks, , , ,

Lehman (LEH) Chapter 11 Could Occur Today, Financial Stocks Could Open Off 20%

95129cSeveral media reports say that large financial firms are trying to reduce their risk to deals that they have with Lehman (LEH) in the event that the firm begins a liquidation later today.

According to Bloomberg, "Banks and brokers today held a session for netting derivatives transactions with Lehman, or canceling trades that offset each other, in case the New York-based firm files for bankruptcy before midnight New York time."

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Posted on: September 14, 2008 – 3:11 pm in Brokerage Firms, , ,

Rumor: Barclays (BCS) Pulls Out Of Lehman (LEH) Bid

AngrybearAfter appearing to be the front-runner for buying Lehman (LEH), rumors say that Barclays (BCS) has dropped out of the bidding completely.

The reason seems to be that the federal government refuses to back Lehman’s portfolio of commercial loans.

Treasury and the Fed are trying to close a deal to takeover or break-up Lehman before the Asia markets open at 7PM EST. Concerns are the if the matter is left open, financial markets could panic.

Douglas A. McIntyre

Posted on: September 14, 2008 – 2:57 pm in Mergers and Buy Outs, ,

Lehman (LEH): Barclays Now Most Likely Bidder

Lehman_brothersSorting out the potential aspects of a rescue of Lehman (LEH) has become like working on the puzzle of a Rubik’s Cube. The front runner in the bidding is probably Barclays (BCS), but that raises the question of why none of Wall St.’s other major firms is not fighting for a piece of the action.

Perhaps the rule of "the greater fool" is at work.

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Posted on: September 14, 2008 – 7:14 am in Banking, ,