Bear dead, is Lehman Bros. next?

[swag]

http://www.investmentnews.com/apps/pbcs.dll/article?AID=/20080317/REG/107488372/1094/INDaily01

. . .

The credit rating agency warned that the Lehman’s real estate exposure could pose a “not-insignificant burden on profitability.”

As of Nov. 30, Lehman had $80 billion of commercial mortgages on its books, the value of which is growing more dubious by the minute. Lehman was also Wall Street’s leading dealer in subprime residential mortgages for the past few years.

“Who’s Next?” asked a report Monday morning by Fox-Pitt Kelton Cochran Caronia Waller analyst David Trone. “No broker is safe,” he concluded, from the panic that caused investors to stampede out of Bear last week and brought down the 85-year-old firm, forcing it over the weekend into the arms of J.P. Morgan Chase & Co. at a fire-sale price of $2 a share.

The coming few days will also be dismal for Wall Street. Lehman, Goldman Sachs Group Inc., and Morgan Stanley are all expected to report steep declines in first-quarter profits later this week. In addition, they face challenges lining up the short-term debt they rely on to finance their day-to-day operations.

“All the brokers are going to face a funding run this week,” warned Sanford C. Bernstein & Co. analyst Brad Hintz.

. . .

[here_is_to_hope]

1. Does Colbert know the Bear is Dead? n/t

[Clear Blue Sky]

2. Lehman next

I heard the same via a friend on Wall St that Lehman would be the next one likely to fall.

Also told that at some point there will be a great buying opportunity, when the market bottoms out. Not yet though. Million dollar question is when?

[SlowDownFast]

3. Yep. Lehman is next.

Even though they came out with denials today.

Where did we just hear, "Everything's fine with us!" just last week?

After Lehman, it's Goldman Sachs, Morgan Stanley, Merrell Lynch, UBS, TOL (default notices), LEN (default notices), and others that will surprise us (or not).

Not necessarily in that order.

[truth2power]

4. Maybe someone could answer this...about Lehman..

I heard someone say, yesterday, that the only way Lehman could go down is if the Fed was taken down first. The statement was something like, "They'd have to go through the Fed to get to Lehman."

I have no idea why this is, if in fact it's true.

I can't remember where I heard/saw this. I was listening to NPR yesterday afternoon ("Talk of the Nation" or something) and then I watched Nightly Business Report last night. I'm kind of thinking it was on the Business Report.

Sorry to be so confused about this. I've been paying attention to everything I can about the economic mess and it all starts to run together after awhile. :eyes:

edit> for clarity

[DemocratInSoCal]

6. Think Dollars & Helicopters

It probably means that the Fed is prepared to throw as many $$$$$$$$$$$$$$$$$$ as it takes to save Lehman Bros from collapse.

So, as long as there is a Fed, and as long as the printing press works, they are prepared to give Lehman WHATEVER IT WANTS to stay alive.

[truth2power]

7. Doesn't bode well for usordinary people, IMO. We'll get the shaft, again.

:mad:

[Earth Bound Misfit]

5. Merrill riskiest after Bear Stearns, says Wachovia

Reuters
Tuesday, March 18, 2008; 9:45 AM

(Reuters) - Merrill Lynch (MER.N) is the riskiest major broker after Bear Stearns (BSC.N), with gross exposure to subprime collateralized debt obligations of $30.4 billion, 3.3 times the sector average, Wachovia Capital Markets said.

Merrill also had the worst liquidity ratio at 52 percent, compared to Goldman Sachs Group Inc (GS.N) and Lehman Brothers Holdings Inc (LEH.N), and now has the highest leverage in the industry at 31.9 times, analyst Douglas Sipkin said.

Shares of Merrill Lynch rose 7 percent to $44.05 in morning trade, after upbeat earnings from Goldman Sachs and Lehman Brothers led to a rebound in financial stocks.

Sipkin, however, said fears about the ability of U.S. investment banks to continue as going concerns are misguided.

"While liquidity conditions are more challenging than at any time in recent history, the failure of BSC was more a management issue than a market issue in our opinion," the analyst wrote in a note to clients.

Liquidity markets are clearly stretched, but the reputation and capital position of all other brokers will continue to be superior to that of Bear Stearns, he said.

JPMorgan Chase & Co (JPM.N) on Sunday agreed to buy Bear Stearns, slammed by a sudden cash crunch, for just $2 a share -- more than 90 percent below its Friday close....

http://www.washingtonpost.com/wp-dyn/content/article/2008/03/18/AR2008031800932_pf.html

[SlowDownFast]

8. Merrill is suing XL.

In my post above I stated matter-of-factly that Lehman was next, but it DOES look like it might be Merrill.

Merrill Files Suit Against SCA Unit to Maintain CDO Insurance

By Jody Shenn

March 19 (Bloomberg) -- Merrill Lynch & Co. sued XL Capital Assurance Inc. over default protection on $3 billion of collateralized debt obligations that the bond-insurance unit of Security Capital Assurance Ltd. is seeking to void.

``We filed suit to make clear that XL Capital Assurance Inc. is required to meet its contractual obligations for credit default swaps it agreed to,'' Mark Herr, a Merrill Lynch spokesman in New York, said in a statement sent by e-mail today.

To contact the reporter on this story: Jody Shenn in New York at [e-mail].

Last Updated: March 19, 2008 13:58 EDT
http://www.bloomberg.com/apps/news?pid=20601087&sid=aBKpwYoyhbjk&refer=home

This is going to be one huge Mexican Standoff between all these financial institutions.