Did JPM & Citi Screw Lehman?

Eddie Braverman's picture
Rank: The Pro | 21,104

That's the takeaway from a 2,200-page report written by Anton Valukas and filed with the Manhattan federal court today. In it he alleges that JP Morgan and Citi acted in much the same way Goldman Sachs and Societe Generale did to drive AIG into a death spiral.

The two banks apparently changed the structure of their counterparty agreements with Lehman midstream, which led to Lehman's liquidity crisis and eventual $639 billion bankruptcy. That's just not playing nice. In addition to this allegation (which some might view as collusion), the report also dropped a dime on Dick Fuld, Erin Callan, and a couple other Lehmanites for certifying misleading statements.

Mr Valukas, 66, spent a year and $38m producing the report on whether banks such as JPMorgan Chase triggered Lehman's bankruptcy or if Barclays improperly benefited from it and what role was played by the US Federal Reserve System.

You mean to tell me that banks are willing to profit from a competitor's demise?

Comments (14)

Mar 12, 2010

Survival of the fittest. However, foolish indeed. Lehman's demise nearly caused citi's demise, not to mention the the near demise of the global financial markets.

I fail to see the logic behind destroying Lehman..It's unpatriotic, and self destructive. Higher unemployment rate = more defaults on loans = trouble for citi and jpm. I dont think it was meant to fuck over Lehman, I think it was just citi and jpm seeing Lehman as becoming more of a risk..

Mar 12, 2010

lehman deserved to go under. Funding a shit load of bad long-term assets with short term debt is not the formula for success

Mar 12, 2010

I don't view re-negotiating credit terms with a deteriorating counterpart as sinister.

I do however think it is completely ridiculous to enter into repo agreements so you can report on investor call that you have cleaned up your balance sheet.

Mar 12, 2010

If it wasn't JPM and Citi, it would have been another counter-party. Lehman was a dead man walking. I don't think that whoever ended up finishing it off really matters.

Mar 13, 2010

I look foward to watching another round of Jews-driven out-by-Europeans. History always repeat itself.

Mar 13, 2010
levelworm:

I look foward to watching another round of Jews-driven out-by-Europeans. History always repeat itself.

Anti-semite.

Mar 13, 2010

Not exactly, maybe I shouldn't use the words "look forward to", me bad. What I meant is that "I think there ill be another round of....".

Mar 15, 2010
levelworm:

I look foward to watching another round of Jews-driven out-by-Europeans. History always repeat itself.

wtf? this type of hateful speech really has no place on a forum about banking.

Mar 13, 2010

levelworm you are an idiot

but I never understood what it meant to be a "pro-semite" vs. an "anti-semite." the wording itself just baffles me.

Mar 13, 2010

I used the wrong words, and I don't hate Jews, that's it. Sorry for that.

Mar 14, 2010
  1. Lehman was asking for it / wanted it.
  2. Was wondering why there were so many Lufthansa ads on the site; thanks for clarifying the user demographic levelworm.
Mar 12, 2010

Lehman straight up engaged in accounting fraud up to a year before their bankruptcy....

Mar 15, 2010
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