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Lehman Dec 4
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Lehman Brothers And The Treatment Of Derivatives In Bankruptcy - Derivatives, 3
Dec 3, 2015 | Seeking Alpha
By Kurt Dew
Lesson 1 of the Lehman Bankruptcy: In the name of "protecting the system," the bank dealers, their regulators, and their supporters in government office have made it almost certain that, if a dealer fail occurs, the remaining dealers will not lose money, if they clear their derivatives trades. Most derivatives losses in bankruptcy... -
Exclusive — Disgraced Junk-Mortgage Pusher Richard Fuld Gets $5 Million-Mortgage on Jupiter Island Home!
Dec 3, 2015 | Gossip Extra
By Jose Lambiet
It’s the mother of all ironies: Ex-Lehman Brothers boss Richard Fuld, who nearly collapsed the U.S. economy in 2008 by backing millions of subprime mortgages and consumer loans given to folks who couldn’t pay back, just obtained a mortgage! Fuld, 69, and his wife Kathleen, received $5 million from First Republic Bank....
Client Attorney Privileged/Attorney Work Product/At Request of Counsel
Derivatives in Bankruptcy
Dick Fuld
Full Text of Stories Below
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Lehman Brothers And The Treatment Of Derivatives In Bankruptcy - Derivatives, 3
Dec 3, 2015 | Seeking Alpha
By Kurt Dew
Lesson 1 of the Lehman Bankruptcy: In the name of "protecting the system," the bank dealers, their regulators, and their supporters in government office have made it almost certain that, if a dealer fail occurs, the remaining dealers will not lose money, if they clear their derivatives trades. Most derivatives losses in bankruptcy will be borne either by dealer bank customers or taxpayers.
Banks are financial intermediaries. They make their profits by meeting the financial needs of corporate and individual customers on one side of the market for banking services, and the needs of bank liability investors on the other. Through competition of banks with one another, the story goes, each side of the customer business is serviced at the least possible cost.
The system by which derivatives were settled in the Lehman bankruptcy is not in this spirit of customer service. The system made the clearing dealers whole at the expense of Lehman's other creditors, within a few weeks. A later article will consider a means that both further reduces systemic risk and leads to a more equitable division of the pain in bankruptcy.
The system by which derivatives were settled in the Lehman bankruptcy is not in this spirit of customer service. The system made the clearing dealers whole at the expense of Lehman's other creditors, within a few weeks. A later article will consider a means that both further reduces systemic risk and leads to a more equitable division of the pain in bankruptcy.
This lack of interest in customer welfare is a negative factor in the value of the dealers' stocks. In particular, I suggest equity investors avoid the shares of the usual suspects [Citigroup (NYSE: C), Bank of America (NYSE: BAC), Goldman Sachs (NYSE: GS), Morgan Stanley (NYSE: MS), JPMorgan (NYSE: JPM), Deutsche Bank (NYSE: DB) and Barclays (NYSE: BCS)].
Who did best in settlement of derivatives trades with Lehman when Lehman declared bankruptcy?
Biggest winners: Central Counterparty clearing is the best protection from loss resulting from failed counterparties to derivatives deals. Given the fact that cleared derivatives were best protected, it was somewhat surprising how many of the deals between the usual suspects were bilateral. These trades fared far worse, as the tables below, provided by Fleming and Sakar here, show.
Biggest losers: If you have an uncleared bilateral trade, without bank regulator assistance, you were among the biggest losers in bankruptcy.
Cleared OTC trades: "LCH.Clearnet (a subsidiary of LSE Group) resolved Lehman's interest rate swap portfolio, consisting of 66,000 trades and $9 trillion in notional value, settling all transactions by cancellation and payment or transfer within three weeks, well within the margin held and without loss to other market participants."(From Wiggens and Metrick, here.) This clearing exposure was perhaps the greatest single risk from Lehman's collapse among the cleared transactions....
For full story:
http://seekingalpha.com/article/3731276-lehman-brothers-and-the-treatment-of-derivatives-in-bankruptcy-derivatives-3
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Dec 3, 2015 | Gossip Extra
By Jose Lambiet
It’s the mother of all ironies: Ex-Lehman Brothers boss Richard Fuld, who nearly collapsed the U.S. economy in 2008 by backing millions of subprime mortgages and consumer loans given to folks who couldn’t pay back, just obtained a mortgage!
Fuld, 69, and his wife Kathleen, received $5 million from First Republic Bank, according to Martin County property records.
The couple used their stunning $14 million-beachfront property at 265 South Beach Road in Jupiter Island as collateral.
And Fuld didn’t seek the kind of exotic short-term mortgage he and his pompous crew hawked to the public seven years ago: He’s got until 2040 to pay his loan back to the bank!
Those who lost their homes to foreclosure might appreciate the irony: If Fuld screws up and doesn’t pay, he’ll see his house sold on the courthouse steps!
We reached out to Fuld at home in Connecticut to ask what he’s going to do with all that cash but we haven’t heard back from him.
The fallen Wall Street darling and his missus use the property, located a few doors down from golfer Tiger Woods, as a vacation home.
The $14 million-mansion in Jupiter Island owned by disgraced ex-Lehman Brothers boss Richard Fuld (London Sun photo)
They bought it with cold, hard cash in 2006, two years before the collapse and closing of Lehman Brothers sparked a domino effect that eventually caused an economic downturn still felt today.
As Lehman headed for bankruptcy court, Fuld famously testified in U.S. Congress hearings organized to figure out how to prevent the country from sinking into a depression...
For full story:
http://www.gossipextra.com/2015/12/03/richard-fuld-lehman-gets-mortage-florida-house-5438/
Client Attorney Privileged/Attorney Work Product/At Request of Counsel
Derivatives in Bankruptcy
Dick Fuld
Full Text of Stories Below
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