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Lehman Feb 8
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Lehman Sues Lenders Over Faulty Mortgage Sales
Feb 5, 2016 | Law360
By Evan Weinberger
Lehman Brothers Holdings Inc. on Wednesday sued nearly 60 mortgage originators that it says sold it faulty mortgages that resulted in the failed investment bank paying more than $1.2 billion in settlements with Fannie Mae and Freddie Mac. The adversary complaint Lehman’s estate filed in the federal bankruptcy court in New York... -
Lehman Brothers Still With Us in Spirits, via Scotch Whisky
Feb 7, 2016 | The Wall Street Journal
By Margot Patrick
Lehman Brothers is gone, but anyone wanting to savor the distinct taste of financial ruin that its name evokes has ways to do so. With a dram of Lehman Brothers Scotch, say. Ashes of Disaster “It has a contrite, bereft peatiness,” says James Green, a 34-year-old London entrepreneur who has created a new liquor line with the doomed bank’s logo. -
When The Next Too-Big-To-Fail Bank Fails
Feb 7, 2016 | Seeking Alpha
By Kurt Dew
First, I think it is axiomatic that there will be another Big Bank "episode." However, the purpose of this article is to suggest that the horrors of this event are exaggerated in the minds of investors. So my point is this: Yes, there will be another "crisis." But the process of resolving the problem is not going to be as nasty as some might think. -
Lehman and J.P. Morgan Seek Approval of $1.42 Billion Settlement -- Week Ahead
Feb 5, 2016 | Nasdaq
By Stephanie Gleason
Ahead of a long weekend, companies are looking for approval from bankruptcy judges next week on a variety of motions, including one signoff that would largely conclude an old dispute. On Monday, J.P. Morgan Chase & Co. and the remnants of Lehman Brothers Holdings Inc. will ask for approval of a $1.42 billion settlement that resolves...
Client Attorney Privileged/Attorney Work Product/At Request of Counsel
Fannie Mae and Freddie Mac
Lehman Brothers Scotch
Comment - Derivatives
J.P. Morgan Chase & Co.
Full Text of Stories Below
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Lehman Sues Lenders Over Faulty Mortgage Sales
Feb 5, 2016 | Law360
By Evan Weinberger
Lehman Brothers Holdings Inc. on Wednesday sued nearly 60 mortgage originators that it says sold it faulty mortgages that resulted in the failed investment bank paying more than $1.2 billion in settlements with Fannie Mae and Freddie Mac.
The adversary complaint Lehman’s estate filed in the federal bankruptcy court in New York is the latest in a string of lawsuits it has filed seeking to enforce indemnification claims against mortgage lenders. The complaint filed Wednesday alleges that the lenders sold Lehman thousands of defective mortgage loans that it then passed along to Fannie Mae and Freddie Mac.
“Pursuant to the agreements, defendants sold to [Lehman Brothers] thousands of Defective Loans that resulted in LBHI being exposed to hundreds of millions of dollars of liability,” the adversary complaint said.
Lehman did not specify any damages amounts in the complaint.
U.S. Bankruptcy Judge James M. Peck approved Lehman’s $767 million settlement with Freddie Mac and $442 million with Fannie Mae in the winter of 2014.
Those deals, announced in 2011, resolved claims that Lehman sold defective mortgages to the two government-sponsored mortgage giants that helped contribute to their collapse in September of 2008, just days before Lehman’s failure.
Since then, Lehman has been on a quest to get the mortgage lenders from which it purchased the mortgages that were then sold to Fannie Mae and Freddie Mac to pay up.
Lehman sued Standard Pacific Mortgage Inc., formerly known as Family Lending Services Inc., in January. That complaint alleged that the lender sold Lehman 24 defective mortgages.
Much like with the Standard Pacific case, Lehman said that the purchase agreements with the approximately 60 lenders it sued Wednesday included clauses stating that the loans conformed with Fannie Mae and Freddie Mac’s requirements.
If those representations were untrue, the lenders could be held responsible under the agreements, Lehman said...For full story: http://www.law360.com/articles/755362/lehman-sues-lenders-over-faulty-mortgage-sales
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Lehman Brothers Still With Us in Spirits, via Scotch Whisky
Feb 7, 2016 | The Wall Street Journal
By Margot Patrick
Lehman Brothers is gone, but anyone wanting to savor the distinct taste of financial ruin that its name evokes has ways to do so.
With a dram of Lehman Brothers Scotch, say. Ashes of Disaster
“It has a contrite, bereft peatiness,” says James Green, a 34-year-old London entrepreneur who has created a new liquor line with the doomed bank’s logo.
He is describing his flagship Scotch whisky, labeled Ashes of Disaster. “The remit to the master blender was to taste the ups and downs of the economic devastation of 2008.”
That year Lehman hit the rocks, helping trigger the global financial crisis. But its name lives on.
“Lehman moment” is shorthand for failure of companies, politicians and countries. Rap lyrics, cartoons and concept artists have invoked the name.
“It’s an explosive brand with great intrinsic value,” says Mr. Green, who plans to offer his spirits online and has gotten orders from bars in London and New York.
But the Lehman name’s owner, too, claims its intrinsic value. Barclays PLC, which bought parts of the firm in bankruptcy, tried in 2014 to block Mr. Green’s using the name. It said in U.S. trademark filings it “has a bona fide intention to use” the name for financial services. Barclays declined to comment.
Lehman Brothers was once a strong brand in a good way. Founded in 1850, it was a global finance leader going into the 21st century.
But after Lehman filed for bankruptcy in September 2008, already-shaky markets swooned, and governments poured money into bailouts.
“Lehman moment” soon came to describe problems elsewhere, etymologist Barry Popik says. China is a frequent sufferer, judging from news reports.
In his 2011 book, “Our Queen,” journalist Robert Hardman wrote that for Britain’s royal family, the “Lehman moment is still the day, in 1987, when Prince Edward put on Tudor fancy dress and cajoled certain members of his family to take part in a televised game show,” making them look less than royal.
The name appeared in movie and song. In the 2010 movie “Despicable Me,” villain-turned-hero Gru enters “Bank of Evil” through a urinal, seeking funds for his plot to steal the moon. Beneath the bank’s sign appeared: “Formerly Lehman Brothers.”
A 2009 Black Eyed Peas lyric about the high life rhymed Lehman with semen. Dre Murray in 2013 rapped: “And the boy stay scheming, thief like Lehman.”
A Danish artist group dubbed itself “Lehman Brothers” for several Copenhagen art-gallery exhibitions exploring capitalism’s underbelly.
The exhibitions riffed on the crisis’s causes in multimedia works that included a gram of cocaine blown by a fan across a glass table and frozen fish thawing to represent themes like greed and inequality.
Kim Kilde, one of the artists, says the group declared bankruptcy last March “due to lack of assets and funding.”
Mr. Green, to pitch his booze, is seeking investors to open Lehman Brothers bars on Wall Street and in London.
A serial entrepreneur, he lighted on the idea in 2013 while trying to decide where to drink with friends from London financial firms.
He worked with distillers in Scotland and South Carolina to create three blends. Snapfire, an American-made spicy whiskey that “almost offends the palate,” he says, is meant to evoke the financial-system collapsing.
Ashes of Disaster is a Scotch with peatiness “tempered with humility to demonstrate the lack of activity that followed the devastation,” he says. Evergreen, a Scotch with “notes of growth and promise,” represents rebirth.
“We want people to taste the story,” Mr. Green says.
Labeling a bottle Lehman tracks a branding tactic of using words with negative connotations to be edgy. Satan sells numerous liquors, including Jim Beam’s Devil’s Cut. Irish whiskey Titanic was introduced in 2011 to mark the 100th anniversary of the doomed ship’s launching.
The downside of the Lehman moniker, says Dean Crutchfield, a New York brand consultant: “It is building recognition out of a name that disgusted millions of people on the planet.”
“There is the issue of association and people not wanting to be associated with the bank that brought down the world economy.”
Mr. Green struggled to get the name past the U.S. Patent and Trademark Office. A case examiner rejected his application in 2013, saying consumers could be misled, writing: “Although the investment firm did not distribute or produce beer or spirits, the institution associated with the ‘Lehman Brothers’ name is so famous that a connection to the firm would be presumed.”
Mr. Green’s lawyer, Robert Garson, responded in an appeal: “Lehman Brothers is evocative of impending doom arising out of imminent failure.” Using it for alcohol “merely conjures up images associated with the term.”
In short, Mr. Garson says, “no one is going to think the products are actually being made by Lehman Brothers.”
The trademark office approved Mr. Green’s application in 2014.
Barclays wouldn’t drink to that, filing an objection. It acquired the name’s rights in 2008 and licenses it to the bankruptcy estate still winding down operations Barclays didn’t buy.
Barclays in its filing said Lehman was “one of the most ubiquitous and well-known marks” in financial services and approving it for spirits would dilute its “distinctive quality.”...
For full story: http://www.wsj.com/articles/lehman-brothers-still-with-us-in-spirits-via-scotch-whisky-1454893357
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When The Next Too-Big-To-Fail Bank Fails
Feb 7, 2016 | Seeking Alpha
By Kurt Dew
First, I think it is axiomatic that there will be another Big Bank "episode." However, the purpose of this article is to suggest that the horrors of this event are exaggerated in the minds of investors. So my point is this: Yes, there will be another "crisis." But the process of resolving the problem is not going to be as nasty as some might think.
Close observers of the Lehman Brothers bankruptcy may have concluded otherwise. I rebut this view.
I believe the fears of crisis-induced dealer-bank insolvency are part of the puzzle of the anemic market valuation of these banks. While there are other reasons for these weak valuations that I accept - such as the European dealers' [Barclays (NYSE: BCS) Credit Suisse (NYSE: CS), Deutsche Bank (NYSE: DB) and UBS (NYSE: UBS)] current desperate dash for the exit door of the dealer community - I believe the valuation of dealers like Bank of America (NYSE: BAC), Citigroup (NYSE: C), Goldman Sachs (NYSE: GS), and JPMorgan Chase (NYSE: JPM) are being unfairly penalized by fear of a TBTF collapse.
The reason there will be another episode is that history promises it. There have always been bank "episodes." They occur regularly everywhere on the globe where banks are in competition. (But not, for example, from 1945-1970 in the US, when banks were not permitted to compete. Or in Europe where failing banks become wards of the state.)
Episodes are in the genes of financial institutions when they compete. Yes, Dodd Frank makes TBTF "illegal." But the government has outlawed TBTF at least three times so far. The effect of the first two prohibitions have been nil. Once after the Continental Bank Crisis, once after Long Term Capital, and once after Lehman Brothers. Although these episodes are inevitably linked in our minds, they were very different. That's why I use the word "episode," rather than failure or bankruptcy.
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I take the planned concerted attempt by the federal government to punish the debt- and equity-holders in the next bank failure seriously. There is no longer support within the ranks of government for a multi-billion-dollar bailout under any circumstances. But that bailout can be avoided (barely, with the current fragile OTC market structure) and there is a reasonable plan to prevent TBTF banks from endangering the system.
It is clear at the moment that our dealer banks are solvent. In other words, given the time, the large US dealer banks would easily pay off their debts if forced to do so today.
The problem is, in crises, a bank is never given time. And very few financial institutions, least of all banks, can liquidate in a matter of days. This fact is the reason episodes are inevitable.
When investing in financials, such crises must be considered straight on. It is pointless to go into denial. But expecting such things is, I emphasize, not inconsistent with the purchase of banks' common stock. But in doing so, an investor should consider how the crisis event will play out.
In the current environment, which needs changing desperately, it is crucial to understand, on a day-by-day basis, what the likely chain of events will be. The possibilities today are the result of the government's learning experience with past episodes - most recently, and importantly, the Lehman Brothers bankruptcy. There were four interesting aspects of that episode.
1. Lehman Brothers had done exactly zero planning about the effects of bankruptcy on the company. They concluded from the Bear Stearns rescue that bankruptcy was off the table.
2. The filing of bankruptcy was the direct result of a very strong rumor that the regulators would not step in.
3. The derivatives positions of Lehman Brothers, an obvious potential source of problems, split neatly into two pieces: a.) the cleared derivatives, which were terminated and transferred within four days of Lehman's declaration of bankruptcy, and b.) the bilateral derivatives positions, many of which remain unresolved today.
4. The cleared derivatives positions, and their handling by derivatives clearing houses, are the issue that distinguished the Lehman bankruptcy from the earlier experiences. The exchanges, unleashed from any concern for a court defense of Lehman's estate by their exemption from the bankruptcy law, went into an unprecedented instant feeding frenzy, consuming vast amounts of Lehman's marketable assets in a four-day span...
For full story: http://seekingalpha.com/article/3873036-next-big-fail-bank-fails
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Lehman and J.P. Morgan Seek Approval of $1.42 Billion Settlement -- Week Ahead
Feb 5, 2016 | Nasdaq
By Stephanie Gleason
Ahead of a long weekend, companies are looking for approval from bankruptcy judges next week on a variety of motions, including one signoff that would largely conclude an old dispute.
On Monday, J.P. Morgan Chase & Co. and the remnants of Lehman Brothers Holdings Inc. will ask for approval of a $1.42 billion settlement that resolves claims that J.P. Morgan illegally siphoned billions of dollars from Lehman before its collapse.
Although the settlement doesn't resolve all the claims between Lehman and J.P. Morgan, it ends a "significant portion" of their disputes, court papers said, and allows the post-bankruptcy Lehman estate to make another $1.5 billion distribution to the investment bank's creditors.
The settlement comes after a federal judge last fall ruled for J.P. Morgan, saying the bank didn't abuse its leverage as Lehman's primary clearing bank to force the investment bank to hand over more collateral in the weeks before its September 2008 collapse.
On Thursday, Magnum Hunter Resources Corp. will ask a bankruptcy judge to allow it to begin polling creditors on the terms of its proposed restructuring plan...
For full story: http://www.nasdaq.com/article/lehman-and-jp-morgan-seek-approval-of-142-billion-settlement--week-ahead-20160205-00496
Client Attorney Privileged/Attorney Work Product/At Request of Counsel
Fannie Mae and Freddie Mac
Lehman Brothers Scotch
Comment - Derivatives
J.P. Morgan Chase & Co.
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