More Lehman Ridiculousness

By Jim Wiandt

Matt Hougan is so worried about being scooped that he's forgetting the most important, and most neglected part of the equation: investors.

Matt - I did read Murray's excellent article. I'm not sure it would have inspired me to bail out on my Opta holdings, if I'd had any, but in retrospect, it should have. For you to really just give up on investors here and throw in the towel—"The idea that Barclays was going to step in and pay off the ETNs as part of its agreement to buy Lehman's investment banking and trading operations was a fantasy,"—though, is shocking.

Investors may have been hit a weak grounder to short, but you're not even running it out on their behalf. I want to dig into that story. Because something REALLY ain't right here where those (fully hedged) products just end up with pennies on the dollar. But I guess now we understand ETNs more fully...and we can at least in part thank Barclays for that.

And I mean honestly on the scoop...that was no diss meant at you and Murray at all. You guys have got to have your cocktails and rub elbows with the Bogleites down there. Did you guys bring your fiddles? Because let me tell you, Rome IS burning.

The supposedly conservative part of the government is continuing its tendency toward unfettered, unchecked and unfunded spending. And the appointed guy who is to be writing the ($700 billion worth of) checks ran a company at the originating epicenter of the debacle. Can we get a government that understands the concept of balancing a checkbook? Just ONE of the parties, please. Either one. Over $11 TRILLION the debt cap is being adjusted to. That's not a debt cap. That's a cloud, drifting by unmoored.

Am I the only one who is indignant (and awake) here?

In your commentary on my blog about the forthcoming Lehman ETN default, you say:

The idea that Barclays was going to step in and pay off the ETNs as part of its agreement to buy Lehman's investment banking and trading operations was a fantasy. The Opta ETNs were general obligations of Lehman Brothers' Holdings, and Barclays was very careful to exclude those debts from its buyout. It specifically did not want to take on the structured product debt from Lehman, and it could hardly pay off some but not all of the structured products. Just imagine the outcry!

Where is the indignation, Matt? The Bear investors were all made whole in the JP Morgan (JPM) deal. There's something, and it's something big, that is not right about Barclays (BCS) getting the Lehman assets for pennies on the dollar and not paying off the accompanying debt, while deciding to set aside over $2.5 BILLION to pay the new Lehman employees' 2008 bonuses. Great job guys! Merry Christmas!

Let's pay out the bonuses while the investors get the shaft. Barclays is happy with a nice new division ("look mom, no debts"), and the Lehman employees have hardly missed a beat ... heck, they don't even need to give up their BONUSES, let alone their salaries. I mean, are you kidding me?

Comments

[venividivici:]

Rule Number 1 of management in big business not just Wall Street, "management looks after management".

2008 Sep 24 10:48 PM

[FunkMunk:]

Jim- that $2.5 billion is being set aside for severances to those employees from Lehman getting laid off in 90 days, not bonuses.

2008 Sep 25 08:27 PM