Chapter 849： Lehman is down (crying), laughing

There is a market when there is supply and demand. For capitalists, as long as there is profit space, there is nothing they dare not do.

Nowadays, the prosperity of the financial subprime business in the United States is due to their operation. Because they think the money is too slow, they can also make financial products and put them on the market in batches.

After all, the loan service generated by the sale of subprime mortgages is actually the same thing as buying bonds - although they are two different things in terms of nature, smart people always have a smarter explanation.

Anyway, as long as the people believe that this thing can be profitable, there will definitely be people who want it. Before the middle of 2007, the subprime mortgage market was indeed very risky. Even now, the risk is not that big, because everyone has confirmed that The "bright" future, even the government thinks so, with the whole world relying on the hegemony of the US dollar, it seems that the speed should indeed be accelerated.

But history will tell naive people that the subprime mortgage crisis really came after the Tulip massacre and the Internet bubble.

......

In New York in mid-August 2008, various stock exchanges were still in full swing.

What is even more interesting is that the wolves of Wall Street, after knowing that there was a small problem in the subprime mortgage business, began to frantically short their "own people". After Bear Stearns was swallowed by the **** in a very "peaceful" way, They turned their attention to other investment banks that had problems because of the excessive proportion of subprime mortgage business, such as Freddie Mac and Fannie Mae, under the tide of run-

As losses in the housing market continued to mount, the two houses suffered the same situation as Bear Stearns.

And because they couldn't come up with cash, even the government's credit was useless, and the two houses' stock prices began to plummet.

In just one month, Fannie Mae shares fell 28 percent, while Freddie Mac shares fell 34 percent.

More importantly, the two houses account for almost half of the home mortgage market. In desperation, Treasury Secretary Paulson decided to ask Congress to authorize the Treasury Department to take over the two companies.

This kind of trusteeship is equivalent to nationalizing it.

After this scene was over, Bernanke and Paulson squatted on the steps side by side, shivering and pulled out two cigarettes, right to the fire, and exhaled a smoke ring - these two troubled brothers have been made by Bear Stearns and the two rooms these days. I was exhausted, and now I can finally take a breath.

However, Lehman Brothers was on its way at full speed with a gas can.

Many people regard the fall of Lehman Brothers as a landmark event of the subprime mortgage crisis. In fact, it makes sense. They are the fourth largest investment bank in the five major investment banks, and they are large in size.

As the market tightened, Lehman Brothers also suffered, holding a lot of subprime mortgage assets that could not be sold.

In the first quarter of 2008 alone, Lehman had outstanding repurchase agreements worth nearly $200 billion, with write-down assets of up to $10 billion.

After Bear Stearns was acquired, Lehman Brothers, which is similar to it, was of course questioned by many people, and its stock was also affected.

But Lehman was Lehman after all, not Bear Stearns, the new wolf. Under such unfavorable circumstances, he persisted for a long time.

In June 2008, Lehman Brothers' balance sheet had shareholders' equity of $26 billion, assets of $639 billion, and a leverage ratio of only 25:1, far lower than similar investment banks.

At the same time, Lehman still has 45 billion US dollars in cash and highly liquid securities, and the company's executives are confident to meet any payment needs.

However, in the current market, no one believes that these things are really worth that much money.

As long as Lehman's business assets were written down by 30 percent, they would be insolvent.

In July, Lehman Brothers applied to the Fed to transform into a bank holding company to gain access to all the Fed's projects to ensure the stability of funds, but was rejected.

Afterwards, they negotiated with the Korea Development Bank, hoping to introduce a strategic shareholder, but the negotiation broke down.

Then I tried to communicate with Bank of America, but it still failed.

Lehman Brothers has not given up yet, after repeated defeats and battles, they found Barclays Capital.

At that time, Barclays was a very suitable strategic shareholder with strong capital and coveted Wall Street tickets, but according to British regulations, this matter must be approved by the British Financial Services Authority.

And when Paulson acted as a go-between to call the head of the FSA, he was rejected.

In short, at the beginning, no one wanted Lehman Brothers to fall. After all, the Federal Reserve even helped Bear Stearns.

Sure enough, after the failure of "self-rescue", on September 12, 2008, Fed Chairman Bernanke, New York Fed Chairman Geithner, US Treasury Secretary Paulson, and Securities and Exchange Commission Chairman Cox convened Citigroup, *** *, Morgan Stanley, Goldman Sachs, Merrill Lynch executives for three consecutive days at the New York Federal Reserve Bank headquarters in Manhattan to urgently discuss how to save Lehman Brothers.

The common feature of these financial institutions is that everyone is Lehman's creditors - if Lehman falls, they will all be hit hard and their investments will be lost.

Obviously, Bernanke and Paulson hope that these guys can stand up and help each other, and then cross the quagmire first.

However, Lehman Brothers, which lacks government protection, is a bottomless pit. These institutions are neither willing nor able to bear Lehman's non-performing assets. They all hope that the Fed can help as in the Bear Stearns case - the Fed can bear it by itself Most of the asset baggage. The meeting ended in vain.

So, why did the Fed decide not to take responsibility for the rescue this time?

Because at the moment when the two rooms were entrusted by the government, the political atmosphere was different.

During this time, Bernanke and Paulson have come under enormous pressure to save the market, blamed on the negative publicity of "intervention in the market," coupled with their unrestricted commitments to Fannie and Freddie.

If the taxpayer's money is used to bail out the capitalists, lawyers and some political groups will be clamoring again, and the rescue of Lehman will require far more than Bear Stearns and the two houses.

The two are also very worried that the government's backstop has given a very bad start to the financial market. Major institutions will be more reckless and will carry out more reckless operations in the future. The government is fine.

In other words, Paulson and Bernanke have reached a consensus that the handling model of Bear Stearns and the two houses will never become the norm. Otherwise, all institutions will be threatened with death, and market rules will no longer have any effect. .

For this reason, the bottom line of the Fed's psychology is: the public's money will not be invested in any Lehman-related transactions, and these people cannot be made to think that the government will make an infinite bottom line.

On September 14th, a very ordinary day Paulson notified Lehman Brothers President Fuld of the bad news that the meeting decided not to rescue.

After hearing the verdict, Lehman Brothers burst into tears, looked resentfully in the direction of Bear Stearns and swore: After I die, there will be floods here!

That night, Lehman Brothers filed for bankruptcy protection.

This 158-year-old company has experienced the collapse of the railway company in the 19th century and the "Great Depression" of the 1930s. It can be called a battle-hardened big brother.

By the way, before it collapsed, Lehman Brothers was very humane and distributed the remaining reserve funds as an early year-end reward to the senior management that should be distributed.

In the post-Lehman financial era, international hot money has begun to threaten everyone. Affected by this and the subsequent market panic, the global financial market has stagnated. What is more serious is that the United States is very dependent on credit, and the economy can withstand the stock market and even the stock market. The decline in real estate, but the economic austerity is unacceptable.

This has also directly led to the economic depression - many large companies need bank loans to support, not to mention some small and medium-sized enterprises or companies whose finances are not so healthy, the banking business is more tightened, and they will face the embarrassment of not being able to pay workers' wages.

Then, the bankrupt tide came, and then it got worse.

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