Lehman Brothers Bankruptcy Likely After Buyers Shunned By Feds
Author: Rob K. Blake | Date: September 15, 2008 | Filed In: Mortgage News
Lehman Brothers bankruptcy is now more likely than ever after potential suitors, Bank of America and Barclays, got shut out when asking for a government backstop against bad mortgage losses.
Lehman Brothers Bankruptcy Probable
The Washingtonpost.com reports even though Lehman Brothers had at least a few buyers in line, once the Treasury and the Fed decided they were not going to take on the mortgage exposure as they did in the Bear Stearns deal, they ran for the hills…by saying,
“Several firms, especially Bank of America and the British bank Barclays, wanted control of Lehman’s investment banking and asset management businesses. However, they wanted no part of billions in shaky real estate and other investments on Lehman’s books, and wanted either taxpayers or other financial firms to assume part of that risk.”
It seems as if the commercial bank suitors wanted their cake and eat it too. Offering to buy on the best parts of Lehman, but leave the risky parts for another company or the government to sholder.
That’s just like a banker…ask the unreasonable and expect it to happen.
The Washingtonpost.com put it this way,
“But other companies decided they didn’t want to take on the distressed assets, leaving only the good ones for Bank of America or Barclays. They concluded they would rather risk potential problems in the financial markets on Monday than plow their limited cash into a venture that would be expected to have poor returns. And the Fed and Treasury refused to make government money available.”
I must admit this is a little baffling to me since the Fed has not said no to one of their own when it came to cannibalizing an investment bank. My guess is the price per share was too much. If either bank had struck a deal at $8-$10 a share, the Fed would have helped.
Now it’s just easier to let Lehman Brothers slip into bankruptcy and buy their assets on the cheap. Either way, the commercial banks have one less competitor if the Lehman Brothers bankruptcy goes through.
Good Luck!
PS: Here’s a Bloomberg video clip on the Lehman Brothers bankruptcy…
Author: Rob K. Blake
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How much of the mortgage meltdown and belly up of companies like Lehman Brothers had to do with the Horrible Loan Servicing of companies like defunct Ocwen Federal Bank, or Ocwen LLC, or Countrywide Mortgage? Many of these banks have either been cited for violations by the Office of Thrift Supervision for servicing violations or have been scrutinized by the FBI.
Had those Loan Servicers followed their part of FHA contracts by following the Real Estate Settlement Procedures Act prior to filing foreclosures some of this could have been prevented. HUD just asked congress to put some teeth in the HUD regulations by allowing injunctive relief to the home owner when the RESPA rule is violated.
Unfortunately most people in foreclosure do not have any representation. Lawyers have refused to represent clients unless they can come up with at least $10,000. Many of these cases did not get past the instant summary judgment by not having to show the courts that many foreclosures took place prior to the Bank ever really assigning the note to the bank that is suing. See Judge Boyko dismissal of cases in Ohio.
Had people been able to show to the court these unscrupulous dealings of many of these corrupt loan servicers then maybe there would have been some outcry sooner than now.
Lawyers are partly responsible for refusing to assist homeowners in dealing with these unscrupulous companies.
Banks choose to pool these loans into packages for investments call REMIC, and someone that paid $10,000 for a pass through certificate could now have the loan transferred to the certificate holders so when the home was foreclosed on the certificate holder would get rich quick. In many states the bank that owned the note was also the bank that held the securities and is only the trustee is identified in court records not the holder. Many states do not require under law the holder of the securities be identified in court. The Banks holding the note can write off the note as bad or file for bankruptcy, and still own the note through securities it purchased using the note as collateral yet they paid NO TAX on the investments because they were REMICS.
This has been the biggest scam even on the public.
We need to end the law that allows trustees’ to refuse to identify who they are trustee for such as in OKLAHOMA. This only leads to huge corruption by hiding the true holder of the loans that are going to be foreclosed on.
When the Banks are saying they are going bankrupt they could have huge holdings that they will still profit on by law that allow them to hide asset in many states since they only have to identify the trustee. If those holdings were pass through certificate they paid no tax at all for there investment!
Why should the American public bail out companies that have not paid taxes on the properties they have as assets on and make huge profits on during foreclosures but do not have to tell any court who the holder of the Note really are!
It is a lie and myth the lender does not have to identify the holder of the certificate under contract laws, so, any court ruling otherwise, is issuing a void order and trespasses upon the law!