The investment bank, Lehman Brothers, in an all-out fight for its survival, said Wednesday morning that it expected a loss of $3.9 billion, or $5.92 a share, in the third quarter after $5.6 billion in write-downs.
The investment bank also said that it would spin off the majority of its remaining commercial real estate holdings into a new public company. And it confirmed plans to sell a majority of its investment management division in a move that it expects to generate $3 billion.
The announcements come after Lehman’s stock lost nearly half its value on Tuesday as investors feared it was running out of options to raise capital and shore up its ailing balance sheet. Shares in Lehman, a major underwriter of mortgage-related securities during the credit boom, are down over 90 percent since hitting their peak last year before the subprime mortgage crisis.
We know how this dance goes. A few days of “too big to fail” murmering, followed by a quick bailout by the fed and golden parachutes for the CEO’s, then we forget about it for a few months until Edward Jones or whoever else is next fails.
Meanwhile, the looters get away.
*** Update ***
Washington Mutual is apparently next.
Bob In Pacifica
Ugh. I hope the bridge I’m sleeping under doesn’t go bankrupt.
Conservatively Liberal
Watch WaMu. They are under super secret double detention right now. Their rating just moved to negative now (bad loans coming home to roost).
WaMu got a short reprieve, but it probably will not last.
SpotWeld
Okay, this is me being paranoid… but has anyone else considered that all the big Oil Companies are also considered “too big to fail” and are invested in accordingly?
SGEW
From the International Herald Tribune:
I can haz market panic?
Doug H. (Fausto no more)
Meanwhile, McCain responds by finding something else stupid to say about Obama, and the base breaks out the pom-poms and kneepads agian.
Face
Unpossible. After all, they own the money printing presses.
mark
I wonder how Obama would do with the “socialism for the rich” meme.
Conservatively Liberal
Improved. ;)
Blue Buddha
Actually, the corporation that the Fed. gov’t sold the bridge to is going to start charging rent to all the bums sleeping underneath it, because they’re running short on money. In a few years, they then go bankrupt, and the Fed gov’t bails them out. Then in another 5-10 years, the bridge will collapse due to lack of maintenance, killing 23 homeless people and 14 car passengers. The corporation will blame the government and the engineers who designed it for doing a shitty job in building it. The gov’t will say “mea culpa”, and nothing happens to the corporation, while they continue to break 83%/qtr. growth records.
The Moar You Know
WaMu is well and truly fucked. They wrote a lot of mortgages here in California. And frankly it couldn’t happen to a more deserving institution, but I’m sure I’ll end up paying for their negligence as well.
R. Porrofatto
Richard Fuld, the CEO of Lehman Bros, received $307 million in “compensation” just over the last 5 years. In addition to that, the board changed a few rules in 2006 so he could be given “extra” stock worth $186 million, payable annually in 10 equal installments as long as he was with Lehman. The bad news is that soon there may not be a Lehman for him to be with anymore. Poor, poor Dick.
When will Americans realize who the real parasites bleeding the economy dry are?
Gay Veteran
America has been LOOTED
Lie baby, lie!
The Fed will bail them out. We will see this socialized form of corporate welfare continue at least until November. Then, if Obama wins, they’ll let the the whole thing quickly fall apart and let him pick up the pieces and saddle him with the blame. If McLiar wins, they’ll continue bailing out the big boys until things collapse on their own.
Conservatively Liberal
WaMu off another 28%.
As Calculated Risk said: Wow.
tavella
WaMu’s actually my bank; the *banking* side of it is actually quite nice (was CalFed, got brought by CitiBank, they drove me off in months with their unhelpfulness and attempt to screw me with fees everywhere.) I’m not worried about my money per se as I’m well under the 100K, but I do wonder if my automatic payments and the like might get disrupted.
I’d switch, but it’s hard to find a bank that doesn’t screw you with fees these days.
bloomingpol
Edward Jones is a partnership, no stock, no investment bank. And doing fine.
Tax Analyst
Yes, I am slighter OVER the aggregate 100K, so I’m going to start looking at other banking institutions for at least the part in excess of that plus a bit more, but I have to say that working with their banking side hasn’t been a bad experience. Between that and the fact that I’ve managed to avoid fees with them without too much trouble make me somewhat loathe to leave them.
But I really need to keep my WAMU acccount totals under that 100K threshold because I don’t love them THAT much.
How the Dick Fulds
Just remember if Lehman gpes bankrupt or fire sales, that will put added pressure on asset values of all types — bonds, loans, mortgages and the most important asset to America…THE HOUSE.
There are also trillions of CDS transactions that would have to be unwound.
So we should just let the global financial system collapse or wipe out the equity like Bear Stearns ($2) and move on. The shareholders and employees of Lehman would still be punished.