Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: mishedlo who wrote (84945)	9/11/2008 9:23:10 AM
From: ajtj99	2 Recommendations Read Replies (2) \| Respond to of 116555

Now we have to ponder, what's going to happen to LEH and WM this weekend? Well, LEH does have private equity offers for their money management business, so I'm thinking that will get pushed through. That leaves LEH's trading and brokerage business. My guess is it will get split up between JPM and GS. The reason for this is derivatives and credit default swaps. It can't all go to GS because of Paulson and conflict of interest situations there. If it could have been parceled out to a foreign firm like UBS they would have done it already. MER and MS are the next to go, so LEH can't be swallowed by them. Common shareholders will likely get nothing. I think preferred shareholders in LEH may also take a hit, as they are technically insolvent. As for WM, the FDIC will need to get a stronger bank to take them over, and the only one that can do it is likely WFC. The FDIC will likely have to borrow the entire $30-Billion they are authorized to from the Fed to keep the FDIC solvent, as WM should be about a $60-Billion hit on a fund that has only about $35-billion left in it. The bigger problem is what are deposit holders going to think if the FDIC is down to only $5-Billion after a WM hit and Treasury borrowing? I have not heard of a back-up plan for that, but maybe they have one.