What If Lehman Survived
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What if Lehman had survived? The year that never was
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What if Lehman had survived? The year that never was 07 Sep 2009 One year ago next week, Lehman Brothers became the biggest casualty of what was then merely called the credit crunch, but which later became the global financial crisis Lehman Brothers’ collapse, which followed weeks of speculation over the bank’s future, had consequences that are still working their way through the world’s financial system. Twelve months on, the argument still rages about whether the then Treasury Secretary Henry Paulson committed the gravest error in modern market history by allowing the firm to fail – or whether he was correct to let market forces run their course. What might have happened had the Government stepped in and bailed out Lehman Brothers, as many, including senior managers at the firm, expected right up until the last moment, will never be known. However, following conversations with bankers, analysts and other market participants, Financial News has come up with our own version of what might have taken place had Lehman not collapsed: a counterfactual history of the year for Lehman Brothers that never was. Our account is based as far as possible on similar situations and forecast figures on how an independent Lehman Brothers might have been expected to perform. The “history” also takes into account the likely follow-on effects of Lehman Brothers being saved. For instance, it is likely, said the analysts and economists spoken to by Financial News, that the credit bust of 2009 would not have been as pronounced had there not been an event like a large investment bank collapsing, meaning in turn the recovery might not have been so steep. In addition, the reduction in competition caused by the failure of such a big firm enabled others to make super-normal profits that they might not otherwise have made: such an outcome would have been less pronounced had Lehman survived. Clearly everything in this article – some of it serious, some of it less so – represents a degree of informed conjecture on our part. But it perhaps might go some way to helping answer the question: “What if Lehman had survived?” • September 2008
http://www.efinancialnews.com/usedition/index/content/1055094832
9/9/2009
What if Lehman had survived? The year that never was
Page 2 of 6
September 14: 09:48 (Eastern Standard Time) – After a series of last-minute meetings US authorities step in to save Lehman Brothers with an $50bn injection of capital and a commitment to back all the bank’s liabilities. 10:01 – Goldman Sachs and JP Morgan put out a statement saying they have been handed temporary responsibility for Lehman Brothers’ trading books. Analysts cite Goldman Sachs’ trading expertise and JP Morgan’s dominance of the credit derivatives market for their appointment. September 15: 09:30 – US President George Bush and Treasury Secretary Henry Paulson make joint statement on Air Force One announcing that the Government has made a mandatory offer of $10 per share, valuing Lehman at just under $7bn. 11:30 – Chief executive Richard Fuld announces his resignation and says he will leave the bank by the end of the year. Lehman shares rise on the news the firm has been rescued, while global markets record minor gains. Paulson says the Lehman rescue was “absolutely vital for the maintenance of a properly functioning global financial system”. In a separate meeting at Lehman Brothers’ London office co-chief executive Christian Meissner says the “dream is still on”. September 16: Barclays Capital chief executive Bob Diamond is seen on a flight from New York to London. Diamond is later reported to have complained to colleagues that “this was the big one that got away”. Headhunters in New York report being engaged by rivals to lure Lehman staff with multi-year guaranteed bonuses, prompting the US authorities to authorise two-year loyalty agreements for the bank’s staff in return for a new issue of Lehman deferred stock. September 19: Fuld leaves Lehman’s building for the last time to resounding cheers by staff. The running of the firm is taken over by a new management team led by Thomas Montag, who had quit Merrill Lynch days earlier after arguing with chief executive John Thain over the latter’s rejection of a merger offer from Bank of America on the day of the Lehman bailout. • October October 4: Lehman Brothers shareholders consider a class action suit against the US Government for “materially undervaluing” the firm. Fuld – who had 3.3 million shares and was the firm’s largest individual shareholder – refuses to deny rumours of his involvement. At Merrill Lynch, shareholders are in uproar at Thain’s decision to reject a Bank of America offer for the firm valuing it at a 70% premium to the market price. One investor says: “This guy’s taking a hell of a risk – I’d rather take this offer than 10 bucks from the Government if it all goes wrong.” • November November 10: Economic data suggests the bottom of the economic downturn may be close, and that the US may avoid recession. But the toll of the crisis continues to make its mark as banks continue to lay off staff in loss-making businesses. Six days after Financial News breaks the story that JP Morgan is shutting its standalone global proprietary trading business, Lehman announces a similar measure with the loss of more than 50 jobs.
http://www.efinancialnews.com/usedition/index/content/1055094832
9/9/2009
What if Lehman had survived? The year that never was
Page 3 of 6
November 15: At special meeting of the G20 finance ministers, a communiqué says Lehman’s rescue has “negated the need for sustained and substantial intervention in the markets”. UK Chancellor Alistair Darling says draft plans for a “quantitative easing” programme have been “put on ice”. • December December 11: Lehman Brothers-sponsored rugby match between Oxford and Cambridge goes ahead after fighting off a challenge from Nomura to back the event. Meissner hands out the trophy to winners Oxford, who beat Cambridge by 33 points to 29. • January January 2: Restructuring plan announced by Lehman Brothers, beginning with splitting the firm into a “good bank” and a “bad bank”, two months after Swiss authorities split UBS along similar lines, with the US Government assuming in excess of $600bn of its liabilities. Goldman Sachs is given a mandate to manage the bad bank, which is renamed Maiden Lane Corp, with Neel Kashkari – the former Goldman banker who had been earmarked by the Treasury to manage the never-used Troubled Asset Relief Program – rejoining from the US Treasury to lead the bank’s team. January 3: The “good bank”, now called Lehman Brothers Trading, announces worldwide reorganisation. The so-called “Goldman Triangle” takes over top positions at the bank. Montag is appointed chief executive, while Meissner takes sole control of the European business and, in Asia, Carsten Kengeter joins from Goldman as the bank’s regional head. Montag tell investors he expects the bank to make a full-year profit in 2009 and says he expects to benefit from the fixed income, currencies and commodities businesses. January 20: Incoming US President Barack Obama mentions Lehman’s rescue during his inauguration speech saying: “Today I say to you that the challenges we face are real. They are serious and they are many. They will not be met easily or in a short span of time. But know this, America – they will be met, like they were when Lehman Brothers seemed destined to fail. Then we did not falter and say it could not be done. We said yes we can.” January 29: Maiden Lane Trading announces the largest full-year loss in US history. Kashkari defends payment of multi-million dollar retention bonuses to Goldman staff now managing the assets, including former Lehman Brothers traders, as “vital for longterm value to taxpayers”. Montag says Lehman Brothers’ holding company will recognise a $3.7bn gain on the acquisition of Lehman Brothers’ “good bank”, wiping out a small loss for 2008 based on “ongoing activities”. He confirms that the bank has offered retention bonuses to more than 80% of former Lehman Brothers managing directors as part of a loyalty scheme, but says they include no cash component and have a minimum five-year vesting period. • February February 10:
http://www.efinancialnews.com/usedition/index/content/1055094832
9/9/2009
What if Lehman had survived? The year that never was
Page 4 of 6
First reports appear over payment of more than $3bn worth of bonuses to Lehman staff. February 12: President Obama makes his first public statement on the growing row over Lehman Brothers bonuses. “It’s hard to understand how traders at Lehman Brothers warranted any bonuses, much less $3bn in extra pay. How do they justify this outrage to the taxpayers who are keeping the company afloat? “In the past six months, Lehman Brothers has received substantial sums from the US Treasury. I’ve asked Secretary Geithner to use that leverage and pursue every legal avenue to block these bonuses and make the American taxpayers whole.” February 13: Chancellor Darling asked in Parliament whether the Government had provided any financial support to Lehman Brothers International as a UK-domiciled business and whether any taxpayers’ money had been used to pay bonuses. Darling says the Government had offered loans at “discounted rates” to Lehman Brothers’ London-based operations to facilitate the bank’s continued operations. He denies any money went to paying bonuses. • March March 1: US Vice-President Joe Biden says plans to continue paying a pension worth millions of dollars to Fuld are “unacceptable” and says the Government may “step in” to prevent its payment. He said: “The President has said that it is not acceptable and therefore it will not be accepted. It might be enforceable in a court of law, this contract, but it is not enforceable in the court of public opinion and that is where the Government steps in.” March 20: Analysts put Lehman Brothers on an “equal-weight” rating and say they expect the North American business to generate revenues of $3.1bn in 2009. They say the outlook remains “extremely uncertain” for Lehman Brothers, but say the bank has the potential to take advantage of the disruption at rivals. They write: “Helping support revenue is the exiting of certain businesses by damaged investment banks, which no longer have the capital nor the risk appetite to compete effectively.” March 27: Lehman Brothers maintains its top-five ranking in US debt underwriting for the first quarter, according to preliminary figures from data providers. The bank slightly improves its position in US equity underwriting to sixth, and maintains position as a top-10 global mergers and acquisitions adviser. • April April 9: First-quarter profits beat all analysts’ forecasts as Lehman Brothers makes nearly $1bn. Montag hails performance as “the most remarkable turnround” and says this marks “the shape of things to come”. Fixed income business is main driver of earnings, particularly flow trading. Montag says the bank is in “active hiring mode” for this business and will seek to grow its market share. • May May 7:
http://www.efinancialnews.com/usedition/index/content/1055094832
9/9/2009
What if Lehman had survived? The year that never was
Page 5 of 6
US Government releases results of stress-testing for 21 large banks. Maiden Lane Corp is excluded from tests due to “the extraordinary nature of its operations”. However, Lehman Brothers Trading passes easily, along with Goldman Sachs and JP Morgan. Analysts say this was never much in doubt given that Lehman Brothers was separated from all of its major liabilities. May 13: Lehman Brothers raised to “overweight” rating by several analysts, one of whom says the bank is one of a group of “flow monsters” that are winning a disproportionate share of the investment banking business on offer, including a large share of the booming corporate bond new issue market. They write: “In FICC JP Morgan, Goldman, Lehman Brothers, Deutsche and so on are gaining share ahead of the pack, based on our discussions. This could make the franchises better businesses than they were two years ago.” • June June 1: In a move described by senior credit bankers as “staggering”, Lehman Brothers hires Deutsche Bank’s former global head of credit trading, Rajeev Misra, as global head of credit markets with a mandate to continue rebuilding the bank’s credit markets business. A Lehman Brothers spokesman refuses to comment on the size of his or anyone else’s bonus package and says compensation is a “private matter”. Questions are asked in the US senate about “wholly inappropriate packages” being offered to Lehman Brothers staff. June 22: Financial News runs a feature titled “How Lehman Brothers came back from the dead and the improbable survival of the US investment banks”. The article looks at how non-US banks, including Barclays and Nomura, have missed an opportunity to build investment banking businesses to rival those of US firms. • July July 9: London-based Goldman Sachs partner managing director Sanaz Zaimi joins Lehman Brothers as head of FICC sales for Europe, the Middle East and Africa. Rumours circulate that Zaimi’s package is worth as much as $14m a year, but a spokesman for Lehman Brothers says the figure is “wildly exaggerated”. July 10: Second quarter results show Lehman Brothers fixed income business has come close to producing record result for the first six months of the year. One analyst ironically notes that if a large investment bank had gone bust they would probably have easily beat the 2007 record on the basis of wider bid/offer spreads and less competition. He writes: “I bet Goldman Sachs and JP Morgan are wishing Lehman had actually been put into bankruptcy last year. If that had happened it is very likely they would now be making more money than they could ever dream of.” July 11: A group of Wall Street executives write an open letter to Geithner complaining of “uncompetitive behaviour” by “certain market participants”. The letter, which publicly becomes better known as “the Sulk from Sachs”, states that statesupported banks have been unfairly using taxpayers’ money to offer aggressive terms in foreign markets, including Europe and Asia. July 13: Montag writes a lengthy riposte in the Wall Street Journal’s comment section,
http://www.efinancialnews.com/usedition/index/content/1055094832
9/9/2009
What if Lehman had survived? The year that never was
Page 6 of 6
saying Lehman Brothers must continue to act aggressively if it is to earn sufficient money to repay the Government and give taxpayers the best possible return. He writes: “The business of America is business. Lehman Brothers embodies this spirit and our staff will use every resource open and available to them to ensure that we maximise the substantial investment the US Government made in us 10 months ago.” • August August 25: Days after the Swiss Government makes more than $1bn from the sale of its stake in UBS, stories emerge that US authorities are considering the sale of several billion dollars worth of Lehman Brothers shares. The bank downplays the rumours, but says the Government remains committed to selling its holding “over time”. August 27: Goldman Sachs is appointed global co-ordinator for the sale of a $2bn stake in Lehman Brothers. Citigroup, JP Morgan and Merrill Lynch are appointed joint bookrunners. Goldman announces a launch date of September 15. • September September 13: Crowds gather outside Lehman Brothers’ New York headquarters to protest against “bankers’ greed”. One placard makes the front page of every newspaper the next morning: “My Government gave these guys $7bn and all I got was the sack.” September 14: One-year anniversary of Lehman Brothers bailout. The most important participants, including Paulson, Fuld and all the major Wall Street bank heads meet for dinner in the executive suite at Lehman’s headquarters. Lloyd Blankfein, Jamie Dimon and John Mack leave early citing “other engagements”. September 15: Lehman Brothers share sale closes four times subscribed, enabling Goldman Sachs to increase the offer price to $30. Underwriters share a fee pot of more than $100m. Article tags: Bankruptcy/Insolvency | Investment Banking | Lehman Brothers | Richard Fuld | USA
This document is for your personal non-commercial use. Any further copying, reproduction, distribution is strictly prohibit To obtain permission please contact [email protected] © 1996-2009 eFinancialNews Ltd
http://www.efinancialnews.com/usedition/index/content/1055094832
9/9/2009
Page 1 of 6
What if Lehman had survived? The year that never was 07 Sep 2009 One year ago next week, Lehman Brothers became the biggest casualty of what was then merely called the credit crunch, but which later became the global financial crisis Lehman Brothers’ collapse, which followed weeks of speculation over the bank’s future, had consequences that are still working their way through the world’s financial system. Twelve months on, the argument still rages about whether the then Treasury Secretary Henry Paulson committed the gravest error in modern market history by allowing the firm to fail – or whether he was correct to let market forces run their course. What might have happened had the Government stepped in and bailed out Lehman Brothers, as many, including senior managers at the firm, expected right up until the last moment, will never be known. However, following conversations with bankers, analysts and other market participants, Financial News has come up with our own version of what might have taken place had Lehman not collapsed: a counterfactual history of the year for Lehman Brothers that never was. Our account is based as far as possible on similar situations and forecast figures on how an independent Lehman Brothers might have been expected to perform. The “history” also takes into account the likely follow-on effects of Lehman Brothers being saved. For instance, it is likely, said the analysts and economists spoken to by Financial News, that the credit bust of 2009 would not have been as pronounced had there not been an event like a large investment bank collapsing, meaning in turn the recovery might not have been so steep. In addition, the reduction in competition caused by the failure of such a big firm enabled others to make super-normal profits that they might not otherwise have made: such an outcome would have been less pronounced had Lehman survived. Clearly everything in this article – some of it serious, some of it less so – represents a degree of informed conjecture on our part. But it perhaps might go some way to helping answer the question: “What if Lehman had survived?” • September 2008
http://www.efinancialnews.com/usedition/index/content/1055094832
9/9/2009
What if Lehman had survived? The year that never was
Page 2 of 6
September 14: 09:48 (Eastern Standard Time) – After a series of last-minute meetings US authorities step in to save Lehman Brothers with an $50bn injection of capital and a commitment to back all the bank’s liabilities. 10:01 – Goldman Sachs and JP Morgan put out a statement saying they have been handed temporary responsibility for Lehman Brothers’ trading books. Analysts cite Goldman Sachs’ trading expertise and JP Morgan’s dominance of the credit derivatives market for their appointment. September 15: 09:30 – US President George Bush and Treasury Secretary Henry Paulson make joint statement on Air Force One announcing that the Government has made a mandatory offer of $10 per share, valuing Lehman at just under $7bn. 11:30 – Chief executive Richard Fuld announces his resignation and says he will leave the bank by the end of the year. Lehman shares rise on the news the firm has been rescued, while global markets record minor gains. Paulson says the Lehman rescue was “absolutely vital for the maintenance of a properly functioning global financial system”. In a separate meeting at Lehman Brothers’ London office co-chief executive Christian Meissner says the “dream is still on”. September 16: Barclays Capital chief executive Bob Diamond is seen on a flight from New York to London. Diamond is later reported to have complained to colleagues that “this was the big one that got away”. Headhunters in New York report being engaged by rivals to lure Lehman staff with multi-year guaranteed bonuses, prompting the US authorities to authorise two-year loyalty agreements for the bank’s staff in return for a new issue of Lehman deferred stock. September 19: Fuld leaves Lehman’s building for the last time to resounding cheers by staff. The running of the firm is taken over by a new management team led by Thomas Montag, who had quit Merrill Lynch days earlier after arguing with chief executive John Thain over the latter’s rejection of a merger offer from Bank of America on the day of the Lehman bailout. • October October 4: Lehman Brothers shareholders consider a class action suit against the US Government for “materially undervaluing” the firm. Fuld – who had 3.3 million shares and was the firm’s largest individual shareholder – refuses to deny rumours of his involvement. At Merrill Lynch, shareholders are in uproar at Thain’s decision to reject a Bank of America offer for the firm valuing it at a 70% premium to the market price. One investor says: “This guy’s taking a hell of a risk – I’d rather take this offer than 10 bucks from the Government if it all goes wrong.” • November November 10: Economic data suggests the bottom of the economic downturn may be close, and that the US may avoid recession. But the toll of the crisis continues to make its mark as banks continue to lay off staff in loss-making businesses. Six days after Financial News breaks the story that JP Morgan is shutting its standalone global proprietary trading business, Lehman announces a similar measure with the loss of more than 50 jobs.
http://www.efinancialnews.com/usedition/index/content/1055094832
9/9/2009
What if Lehman had survived? The year that never was
Page 3 of 6
November 15: At special meeting of the G20 finance ministers, a communiqué says Lehman’s rescue has “negated the need for sustained and substantial intervention in the markets”. UK Chancellor Alistair Darling says draft plans for a “quantitative easing” programme have been “put on ice”. • December December 11: Lehman Brothers-sponsored rugby match between Oxford and Cambridge goes ahead after fighting off a challenge from Nomura to back the event. Meissner hands out the trophy to winners Oxford, who beat Cambridge by 33 points to 29. • January January 2: Restructuring plan announced by Lehman Brothers, beginning with splitting the firm into a “good bank” and a “bad bank”, two months after Swiss authorities split UBS along similar lines, with the US Government assuming in excess of $600bn of its liabilities. Goldman Sachs is given a mandate to manage the bad bank, which is renamed Maiden Lane Corp, with Neel Kashkari – the former Goldman banker who had been earmarked by the Treasury to manage the never-used Troubled Asset Relief Program – rejoining from the US Treasury to lead the bank’s team. January 3: The “good bank”, now called Lehman Brothers Trading, announces worldwide reorganisation. The so-called “Goldman Triangle” takes over top positions at the bank. Montag is appointed chief executive, while Meissner takes sole control of the European business and, in Asia, Carsten Kengeter joins from Goldman as the bank’s regional head. Montag tell investors he expects the bank to make a full-year profit in 2009 and says he expects to benefit from the fixed income, currencies and commodities businesses. January 20: Incoming US President Barack Obama mentions Lehman’s rescue during his inauguration speech saying: “Today I say to you that the challenges we face are real. They are serious and they are many. They will not be met easily or in a short span of time. But know this, America – they will be met, like they were when Lehman Brothers seemed destined to fail. Then we did not falter and say it could not be done. We said yes we can.” January 29: Maiden Lane Trading announces the largest full-year loss in US history. Kashkari defends payment of multi-million dollar retention bonuses to Goldman staff now managing the assets, including former Lehman Brothers traders, as “vital for longterm value to taxpayers”. Montag says Lehman Brothers’ holding company will recognise a $3.7bn gain on the acquisition of Lehman Brothers’ “good bank”, wiping out a small loss for 2008 based on “ongoing activities”. He confirms that the bank has offered retention bonuses to more than 80% of former Lehman Brothers managing directors as part of a loyalty scheme, but says they include no cash component and have a minimum five-year vesting period. • February February 10:
http://www.efinancialnews.com/usedition/index/content/1055094832
9/9/2009
What if Lehman had survived? The year that never was
Page 4 of 6
First reports appear over payment of more than $3bn worth of bonuses to Lehman staff. February 12: President Obama makes his first public statement on the growing row over Lehman Brothers bonuses. “It’s hard to understand how traders at Lehman Brothers warranted any bonuses, much less $3bn in extra pay. How do they justify this outrage to the taxpayers who are keeping the company afloat? “In the past six months, Lehman Brothers has received substantial sums from the US Treasury. I’ve asked Secretary Geithner to use that leverage and pursue every legal avenue to block these bonuses and make the American taxpayers whole.” February 13: Chancellor Darling asked in Parliament whether the Government had provided any financial support to Lehman Brothers International as a UK-domiciled business and whether any taxpayers’ money had been used to pay bonuses. Darling says the Government had offered loans at “discounted rates” to Lehman Brothers’ London-based operations to facilitate the bank’s continued operations. He denies any money went to paying bonuses. • March March 1: US Vice-President Joe Biden says plans to continue paying a pension worth millions of dollars to Fuld are “unacceptable” and says the Government may “step in” to prevent its payment. He said: “The President has said that it is not acceptable and therefore it will not be accepted. It might be enforceable in a court of law, this contract, but it is not enforceable in the court of public opinion and that is where the Government steps in.” March 20: Analysts put Lehman Brothers on an “equal-weight” rating and say they expect the North American business to generate revenues of $3.1bn in 2009. They say the outlook remains “extremely uncertain” for Lehman Brothers, but say the bank has the potential to take advantage of the disruption at rivals. They write: “Helping support revenue is the exiting of certain businesses by damaged investment banks, which no longer have the capital nor the risk appetite to compete effectively.” March 27: Lehman Brothers maintains its top-five ranking in US debt underwriting for the first quarter, according to preliminary figures from data providers. The bank slightly improves its position in US equity underwriting to sixth, and maintains position as a top-10 global mergers and acquisitions adviser. • April April 9: First-quarter profits beat all analysts’ forecasts as Lehman Brothers makes nearly $1bn. Montag hails performance as “the most remarkable turnround” and says this marks “the shape of things to come”. Fixed income business is main driver of earnings, particularly flow trading. Montag says the bank is in “active hiring mode” for this business and will seek to grow its market share. • May May 7:
http://www.efinancialnews.com/usedition/index/content/1055094832
9/9/2009
What if Lehman had survived? The year that never was
Page 5 of 6
US Government releases results of stress-testing for 21 large banks. Maiden Lane Corp is excluded from tests due to “the extraordinary nature of its operations”. However, Lehman Brothers Trading passes easily, along with Goldman Sachs and JP Morgan. Analysts say this was never much in doubt given that Lehman Brothers was separated from all of its major liabilities. May 13: Lehman Brothers raised to “overweight” rating by several analysts, one of whom says the bank is one of a group of “flow monsters” that are winning a disproportionate share of the investment banking business on offer, including a large share of the booming corporate bond new issue market. They write: “In FICC JP Morgan, Goldman, Lehman Brothers, Deutsche and so on are gaining share ahead of the pack, based on our discussions. This could make the franchises better businesses than they were two years ago.” • June June 1: In a move described by senior credit bankers as “staggering”, Lehman Brothers hires Deutsche Bank’s former global head of credit trading, Rajeev Misra, as global head of credit markets with a mandate to continue rebuilding the bank’s credit markets business. A Lehman Brothers spokesman refuses to comment on the size of his or anyone else’s bonus package and says compensation is a “private matter”. Questions are asked in the US senate about “wholly inappropriate packages” being offered to Lehman Brothers staff. June 22: Financial News runs a feature titled “How Lehman Brothers came back from the dead and the improbable survival of the US investment banks”. The article looks at how non-US banks, including Barclays and Nomura, have missed an opportunity to build investment banking businesses to rival those of US firms. • July July 9: London-based Goldman Sachs partner managing director Sanaz Zaimi joins Lehman Brothers as head of FICC sales for Europe, the Middle East and Africa. Rumours circulate that Zaimi’s package is worth as much as $14m a year, but a spokesman for Lehman Brothers says the figure is “wildly exaggerated”. July 10: Second quarter results show Lehman Brothers fixed income business has come close to producing record result for the first six months of the year. One analyst ironically notes that if a large investment bank had gone bust they would probably have easily beat the 2007 record on the basis of wider bid/offer spreads and less competition. He writes: “I bet Goldman Sachs and JP Morgan are wishing Lehman had actually been put into bankruptcy last year. If that had happened it is very likely they would now be making more money than they could ever dream of.” July 11: A group of Wall Street executives write an open letter to Geithner complaining of “uncompetitive behaviour” by “certain market participants”. The letter, which publicly becomes better known as “the Sulk from Sachs”, states that statesupported banks have been unfairly using taxpayers’ money to offer aggressive terms in foreign markets, including Europe and Asia. July 13: Montag writes a lengthy riposte in the Wall Street Journal’s comment section,
http://www.efinancialnews.com/usedition/index/content/1055094832
9/9/2009
What if Lehman had survived? The year that never was
Page 6 of 6
saying Lehman Brothers must continue to act aggressively if it is to earn sufficient money to repay the Government and give taxpayers the best possible return. He writes: “The business of America is business. Lehman Brothers embodies this spirit and our staff will use every resource open and available to them to ensure that we maximise the substantial investment the US Government made in us 10 months ago.” • August August 25: Days after the Swiss Government makes more than $1bn from the sale of its stake in UBS, stories emerge that US authorities are considering the sale of several billion dollars worth of Lehman Brothers shares. The bank downplays the rumours, but says the Government remains committed to selling its holding “over time”. August 27: Goldman Sachs is appointed global co-ordinator for the sale of a $2bn stake in Lehman Brothers. Citigroup, JP Morgan and Merrill Lynch are appointed joint bookrunners. Goldman announces a launch date of September 15. • September September 13: Crowds gather outside Lehman Brothers’ New York headquarters to protest against “bankers’ greed”. One placard makes the front page of every newspaper the next morning: “My Government gave these guys $7bn and all I got was the sack.” September 14: One-year anniversary of Lehman Brothers bailout. The most important participants, including Paulson, Fuld and all the major Wall Street bank heads meet for dinner in the executive suite at Lehman’s headquarters. Lloyd Blankfein, Jamie Dimon and John Mack leave early citing “other engagements”. September 15: Lehman Brothers share sale closes four times subscribed, enabling Goldman Sachs to increase the offer price to $30. Underwriters share a fee pot of more than $100m. Article tags: Bankruptcy/Insolvency | Investment Banking | Lehman Brothers | Richard Fuld | USA
This document is for your personal non-commercial use. Any further copying, reproduction, distribution is strictly prohibit To obtain permission please contact [email protected] © 1996-2009 eFinancialNews Ltd
http://www.efinancialnews.com/usedition/index/content/1055094832
9/9/2009
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