Kevin Lamson

Lehman: Is Bankruptcy an Option?

BANKRUPTCY IS OPTION IS lNSOVLENT. HOW EVER PROFESSIONAL FEES TO LAWYERS ACCOUNTANTS MIGHT EXCEED AMOUNTS PAID TO BOND HOLDERS!!!

Over the past week alone, the United States' two main mortgage-finance firms -- Fannie Mae and Freddie Mac, in place of filing bankruptcy, were put into a "conservatorship" under government, while Lehman Brothers Holdings Inc. is now being pushed by the Government into a possible take over by a rival bank and foreign investors, in place of seeking bankruptcy protection. A Bankruptcy proceeding by design would of course require a complete accounting and valuation of Lehman’s various assets to determine the value of assets vs. the liabilities. Heaven forbid anyone knowing what their bonds are really worth!

Even though Bear Stearns, Fannie Mae, Freddie Mac, Lehman Bros, and Merrill Lynch have so far escaped having to file bankrutpcy. If Lehman doeS file the true value of all its assets will be publicly disclosed. Including the value of it mortgage loans. By filing bankrutpcy, their respective shareholder’s will lose what ever value is left of their shares. But the most of the share value has already been wiped out. Despite being repeatedly assured by management in press release after press release that everything was OK. Bankrutpcy professional fees to attorneys and accountants will be sky high.

The stocks of other U. S. financial firms, including savings and loan giant Washington Mutual, Wall Street investment bank Merrill Lynch & Co. and insurance behemoth American International Group Inc. (AIG) have been whipsawed this week as investors fret about further dominoes to fall. Like the airline industry, once a leading financial like Lehman files bankruptcy, we can probably expect other Financial’s to follow. Especially now that Uncle Sam has decided to stopped bailing out these companies with taxpayer’s money. Perhaps the practice of privatizing profits and socializing losses by government bailouts is coming to and end in the USA. Only time will tell.

Lehman: The End Game

FINANCIALS DIDN'T GO BUST FROM SHORT SELLING THEY WENT BUST BECAUSE OF UNDERWRITING BAD LOANS!!!

I don't think the "shorts" created the problems at Bear Stearns, Countrywide, Indymac, Fannie Mae, Fredde Mac or Lehman Bros. I do think that the land office creation of trillions of dollars of bundled mortgages or questionable value that were financed by the sale of bonds to both domestic and international investors is what created the current eccnomic fiasco that we find in.

Just wait till there are fair market valuations done on all these mortgage loans and/or homes that were acquired when the loan defaulted and were foreclosed. I’m pretty sure you will see that there was top to bottom fraud in funding and originating these loans so they could be flipped to investors. Even the conservative Swiss bankers were taken in by these supposedly safe investments. Swiss bank UBS will be reporting another 5 billion in write downs this quarter. U.S Banks, Investment Banks and GSE's Fannie, Mae and Freddie Mac were slow in reporting the amount of defaults in the various loan portfolio's. Some suspect this was to cover up the problem and keep share prices from tumbling. By what has recently transpired this claim of lulling investors by U.S. financial companies appears to be well founded.

I do not see how anyone can vouch for Fannie Mae or Freddie Mac being financially sound when they are publicly reported as being the holders of guarantors of over half of the existing mortgage loans in the USA Which in turn could mean that they own half of lender owned homes, "REO", that have been foreclosed on in the USA. I think these facts should give pause to any prudent investor that Auntie Fannie and Uncle Freddie, Lehman and Merrill Lynch may not be as financially sound as has been suggested by some folks. One can only hope, for U.S. taxpayer's sake, that Fannie and Freddie assets when valued at fair market will be worth not to much less than its liabilities including contingent liabilities from their guarantees. Only time and audits will tell.