Lehman Bankruptcy Imminent

BofA pulled out

that's a shame. lot's of good guys at lehman. just goes to show, the street is not for the faint of heart.

And Alan Greenspan just opined that we're in a "once-in-a-century" financial crisis.

Golly, Al, do you really think so???

What the new broker-dealer universe will look like. LEH covered a ton of institutional guys and did a pretty decent job. Seems that market share's now out for the taking. You may even see some smaller names grow their sales dept.

I think the niche dealer model might become more popular. A lot of bankers (perhaps with some obvious bias) believe that the big banks no longer have much to offer. It's not as necessary that a bank be a one stop shop now. Ideally clients can choose the best financing house and the best adviser, separately. But then I think that may be what people usually say in a market downturn. Let's see where things go from here.

There are tourists standing outside Lehman, just watching. Absolutely ridiculous. Get lives, people.

Not sure I get the point in the context of Lehman... do you mean people will want to diversify counterparty risk by having a whole bunch of little firms? So they won't be exposed to big bank failures? Or that smaller shops can provide better, non-conflicted advice along with execution equal to or better than big shops? I'm not sure a Lehman bankruptcy is necessary going to create a surge of interest in niche broker/dealers - they aren't any safer or better than they were before Lehman went bust (assuming LEH is in fact toast). If anything, that business will migrate to Goldman. Let me know if I'm off point here.

By "big banks" do you mean Citi, BofA, etc or GS, MS? Because it seems to me like banks with big balance sheets have the most to offer in this climate, at least in terms of counter party risk. The independent broker/dealer model is the one that is going bust...first Bear, then Lehman and ML. Niche dealers are fine as long as their niche is fine, but without diversification they could end up in a bad place.

DealBook has a copy of a letter sent from an unnamed LEH exec to his employees.
http://dealbook.blogs.nytimes.com/2008/09/14/letter-from-a-parting-lehma...

www.sharpeinvesting.com

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A little melodramatic. Not to mention that Ronnie Lott was only making a decision that would affect him, really.

This makes no sense. Dealbook says he's "departing" - does that mean leaving for another firm? Or just that he'll be out on the street when Lehman goes under? And he tells a story about a guy who got injured and kept playing and led the team to more victories. How does the analogy apply to anything? This is not a finger injury. Lehman's lying on the ground with both arms and legs cut off. No one's going to lead team Lehman to the playoffs next year. It's over.

Does anyone know what kind of severance package is typical for this type of bankruptcy situation? Would IB analysts receive a severance package?

www.sharpeinvesting.com

They do not necessarily get anything. They will most likely get nothing, if they even get to keep benefits which is doubtful. In order to get severance they would need to get it approved by the court which would be unlikely in this case. On a similar note, I heard MER is not giving out S&T bonuses this year, can anyone confirm that?

"Would IB analysts receive a severance package?"

No. Bankruptcies don't really allow for severance packages. I think the only thing they allow for is unpaid wages and I'm not sure that investment bankers can claim unpaid wages in a liquidation process.

As one of the villians in Robocop said "I LIKE IT!".