Lehman Bros -- Your Next Step to Early Retirement / Financial Freedom

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Gotta keep the WaMu and Lehman Bros' discussions separate. Starting this now and will add as things start to materialize. Here's a great read to get you familiar with the story:


"Wall Street's 9/11": Did Lehman Brothers Fall or Was It Pushed?"
http://www.globalresearch.ca/index.php?context=va&aid=15103

by Ellen Brown

Global Research, September 8, 2009
Web of Debt


A year after the bankruptcy of Lehman Brothers on September 15, 2008, questions still swirl around its collapse. Lawrence MacDonald, whose book A Colossal Failure of Common Sense came out in July 2009, maintains that the bank was not in substantially worse shape than other major Wall Street banks. He says Lehman was just “put to sleep. They put the pillow over the face of Lehman Brothers and they put her to sleep.” The question is, why?



The Lehman bankruptcy is widely considered to be the watershed event that changed the rules of the game for those Wall Street banks considered “too big to fail.” The bankruptcy option was ruled out once and for all. The taxpayers would have to keep throwing money at the banks, no matter how corrupt, ill-managed or undeserving. As Dean Baker noted in April 2009:

“Geithner has supposedly ruled out the bankruptcy option because when he, along with Henry Paulson and Ben Bernanke, tried letting Lehman Brothers go under last fall, it didn’t turn out very well. Of course, it is not necessary to go the route of an uncontrolled bankruptcy that Geithner and Co. pursued with Lehman. . . . [But] the Geithner crew insists that there are no alternatives to his plan; we have to just keep giving hundreds of billions of dollars to the banks . . . , further enriching the bankers who wrecked the economy.”

Although Lehman Brothers filed for bankruptcy on Monday, September 15, 2008, it was actually “bombed” on September 11, when the biggest one-day drop in its stock and highest trading volume occurred before bankruptcy. Lehman CEO Richard Fuld maintained that the 158 year old bank was brought down by unsubstantiated rumors and illegal naked short selling. Although short selling (selling shares you don’t own) is legal, the short seller is required to have shares lined up to borrow and replace to cover the sale. Failure to buy the shares back in the next three trading days is called a “fail to deliver.” Christopher Cox, who was chairman of the Securities and Exchange Commission in 2008, said in a July 2009 article that naked short selling “can allow manipulators to force prices down far lower than would be possible in legitimate short-selling conditions.” By September 11, 2008, according to the SEC, as many as 32.8 million Lehman shares had been sold and not delivered – a 57-fold increase over the peak of the prior year. For a very large company like Lehman, with plenty of “float” (available shares for trading), this unprecedented number was highly suspicious and warranted serious investigation. But the SEC, which was criticized for failing to follow up even on tips that Bernie Madoff’s business was a ponzi scheme, has yet to announce the results of any investigation.



More Questions



Other questions about the Lehman collapse are raised in David Wessel’s July 2009 book In Fed We Trust. Why was Bear Stearns saved from bankruptcy but Lehman Brothers was not? How could the decision makers not realize the dire consequences of letting Lehman go down?



One possible explanation is that they actually thought the bank would be bought out at the last minute, just as Bear Stearns was. In both cases, the parties worked feverishly over the weekend after the stock’s collapse to try to negotiate a deal. For Bear Stearns, the negotiations succeeded, with the help of the New York Federal Reserve, which provided the loan used by JPMorgan Chase to complete the deal. With Lehman, however, the interested buyer was British, and the help that was needed was from the UK Chancellor of the Exchequer, Alistair Darling. The weekend after the September 11 stock collapse, intense negotiations were pursued with Barclays Bank, which was prepared to underwrite Lehman’s debts; but it needed a waiver from British regulators of a rule requiring shareholder approval. Negotiations continued until the market was getting ready to open in Japan on Sunday, but UK Chancellor of the Exchequer Alistair Darling would not give the necessary waiver. He said something to the effect that he did not want to infect Britain with America’s cancer. The sentiment was understandable, but the question was, why did he wait until it was too late for the Treasury or the Federal Reserve to move in with other arrangements?



The issue takes on more significance in light of the fact that Chancellor Darling played a similar role in another 9-11 collapse the previous year. On September 11, 2007, frantic customers were lining up outside Northern Rock, the UK’s fifth largest mortgage lender, in the first British bank run in 141 years. The bank’s shares plunged 31% in a single day. Like the collapse of Lehman Brothers in the U.S., the bankruptcy of Northern Rock changed the rules of the game. Britain’s major banks too would now be saved at any cost, in order to avoid the loss of customer confidence, panic and bank runs that could precipitate a 1929-style market crash.



With Northern Rock, as with Lehman Brothers, Alistair Darling could have saved the day but backed down. Northern Rock had a willing buyer, Lloyds TSB; but the buyer needed a loan from the Bank of England, which the Bank’s Governor, Mervyn King, had denied. Darling was advised by his staff to overrule the Governor and grant the loan, but this would have cost political capital for UK Prime Minister Gordon Brown, who had been widely lauded for giving the Bank of England its independence in 1997.



Brown is criticized domestically for precipitating the financial crisis with errors made as Chancellor of the Exchequer before he became Prime Minister. Critics maintain the British Treasury has abdicated its responsibility as the financial overseer of the British economy to the Bank of England, which in many ways controls the government, because its advice is always followed regarding the British budget. The whole scenario suggests that the much-vaunted virtues of an independent central bank are overblown. Some economists, including Milton Friedman and Ben Bernanke, blame poor policymaking by an independent Federal Reserve for bringing on the Great Depression of the 1930s.



Shock Therapy?



According to Representative Paul Kanjorski, speaking on C-SPAN in January 2009, the collapse of Lehman Brothers precipitated a $550 billion run on the money market funds on Thursday, September 18. This was the dire news that Treasury Secretary Henry Paulson presented to Congress behind closed doors, prompting Congressional approval of Paulson’s $700 billion bank bailout despite deep misgivings. It was the sort of “shock therapy” discussed by Naomi Klein in her book The Shock Doctrine, in which a major crisis prompts hasty emergency action involving the relinquishment of rights or funds that would otherwise be difficult to pry loose from the citizenry.



Like the “bombing” of Lehman stock on September 11, the $550 billion money market run was suspicious. The stock market had plunged when Lehman filed for bankruptcy on September 15, but it actually went up on September 16. Why did the money market wait until September 18 to collapse? A report by the Joint Economic Committee pointed to the fact that the $62 billion Reserve Primary Fund had “broken the buck” (fallen below a stable $1 per share) due to its Lehman investments; but that had occurred on September 15, and the fund had suspended redemptions for the following week. What dire reversal happened on September 17? According to the SEC, it was another record day for illegal naked short selling. Failed trades climbed to 49.7 million – 23% of Lehman trades.



The Larger Question Is Why?



All of this suggests that Lehman Brothers did not just fall over the brink but was pushed. Judge James Peck, who presided in the bankruptcy proceedings, said “Lehman Brothers became a victim, in effect the only true icon to fall in a tsunami that has befallen the credit markets.”



If Lehman was indeed sacrificed, who pushed it and to what end? Some critics point to Henry Paulson and his cronies at Goldman Sachs, Lehman’s arch rival. Goldman certainly came out on top after Lehman’s demise, but there are other possibilities as well, involving more global players. The month after Lehman collapsed, Gordon Brown and the EU leaders called for using the financial crisis as an opportunity to radically enhance the regulatory power of global institutions. Brown spoke of “a new global financial order,” echoing the “new world order” referred to by globalist banker David Rockefeller when he said in 1994:

“We are on the verge of a global transformation. All we need is the right major crisis and the nations will accept the new world order.”

Richard Haas, President of the U.S. Council on Foreign Relations, wrote in 2006:

“Globalisation . . . implies that sovereignty is not only becoming weaker in reality, but that it needs to become weaker.”

Sovereignty is one of these cherished rights that nations will give up only with “the right major crisis.” Gordon Brown put it like this:

“Sometimes it takes a crisis for people to agree that what is obvious and should have been done years ago, can no longer be postponed. . . . We must create a new international financial architecture for the global age.”

In April 2009, Gordon Brown and Alistair Darling hosted the G20 summit in London, which focused on the financial crisis. A global currency issue was approved, and an international Financial Stability Board was agreed to as global regulator, to be based in the controversial Bank for International Settlements in Basel, Switzerland. The international bankers who caused the financial crisis are indeed capitalizing on it, consolidating their power in “a new global financial order” that gives them top-down global control. Just some food for thought as September 11 rolls around again.


Ellen Brown is a frequent contributor to Global Research. Global Research Articles by Ellen Brown
 

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Theyre all over the place. Long-term holders, gotta ignore short-term fluctuation. Might want to wait a bit before owning too many shares. It'll only test your patience. Dont sell 'em either way, the MMs need more to move the price around wildly. I'll update this one in time, more focused on China and WAMUQ for now.
 

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Everything You Need to Know --

This is what kicked everything off for LEHMQs a few weeks ago, but you don't want LEHMQs unless you're just playing the all-out Parlay (which is cool, nothing wrong with that, I just dont recommend the MQs):

Judge combines Reserve Primary Fund lawsuits
http://www.reuters.com/article/marketsNews/idINN2628529920090826?rpc=44


Here's the important part from that article:
"Third Avenue fund's financial stake in the case "dwarfs" that of any other proposed lead plaintiff.

The judge also said that because Reserve Primary has already distributed more than 85 percent of its assets, it would create "waste" and reduce shareholder recoveries to allow multiple lawsuits.

The Third Avenue fund is represented by Bernstein Litowitz Berger & Grossmann LLP, which was designated lead counsel.

On Tuesday, Reserve Primary said each unpaid investor in the fund could receive as much as 99 cents on the dollar, up from the 98.5 cents it had previously projected."


If the commons are going to see any type of payout, then the Capital Trusts must be paid in full (net additional interest, as well) and the Preferreds will likely get 5-10% of their face value, maybe more.


So, here's a breakdown of the Lehman Bros Stocks you want to own starting Monday of next week (9/14/09). With all the attention likely shifting to WaMu at the beginning of the week, I'm expecting them to lose a little favor amongst the Traders, which will give you an edge to buy them at a discount ... if you're lucky and patient (which means no "All-or-None [AON] orders). Lehman trial is supposed to begin in October, I'll update the board with a calendar when one is put together.


Below you will see the ticker, how many shares there are outstanding, and the face value of each:


Captial Trusts: (should be paid in full)
LEHNQ -- 8M @ $25
LEHKQ -- 12M @ $25
LEHLQ -- 12M @ $25
LHHMQ -- 16M @ $25


Preferreds: (should see 5-10% of face value, maybe more)
LEHCQ -- 5M $50
LEHDQ -- 4M @ $50
LEHFQ -- 12M @ $25
LEHGQ -- 5.2M @ $25
LEHJQ -- 66M @ $25
LEHPQ -- 4M s@ $1000



Have at it guys.


In Full Disclosure, I currently only own LEHPQ (2500 shares) ... waiting for next week to swoop up some CTs on the cheap hopefully. I also do not recommend that you try to day-trade the Preferreds, they're very tough to get back. Patience will pay off here. GLTA
 

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This is what Kuwlness said about owning Lehman Bro stocks on the WAMUQ thread.


"As for the Lehman Bros, the stocks you want to own are:


$LEHPQ -- Preferreds, face value = $1,000. Will we get this much? Probably not, but odds are if the commons are going to get anything (which it sounds like they might get as much as $1), then we'll get at least 5%-10% face value (or $50-100), so about a 25,000-50,000% return from Friday's close. I own these, have 1500 of 'em.


$LBHGP -- Preferreds also, but have the highest percent return if you can get 'em. Leave a "good until cancelled" order open on these. They trade ridiculously light, and it's almost impossible to snatch these up. Face value also $1000, but we'll likely see 5-10% of face value. I can't get my hands on any of these, but will keep trying. GL


$LHHMQ -- Capital Trust. If the preferreds and commons are going to see anything, the Capital Trusts will be paid in full first. $50 face value, so the % return on these isnt as significant, but it's the safest place to have your money and still see a modest return. I own 5000 of these.


The other Capital Trusts are: LEHNQ, LEHKQ, and LEHLQ.


I recommend playing a Parlay with LHHMQ and LEHPQ. If you can get your hands on LBHGP, then you'll really be in for a whopping return, but they're tough to get. But, if you stick with one Capital Trust and one Preferred, you'll be rewarded generously in the next 10 months or so, hopefully sooner. GL"
 

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Yep, what Jason wrote above is what I'd recommend. I don't have any of the Captial Trusts anymore since I sold them last time they made a big run (think it was like 20% in one day). Now, I'm looking to pick those Capital Trusts back up, just havent figured out which ones have the best percentage return right now. We'll know next week ... you have the Face Values above, so determine which ones will give you the best return and buy those if they dip at all this week. I'm guessing they will with attention shifting fully to WaMu with the 9/25 Omnibus hearing coming up. Let's see where the week takes us. GL
 

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Distressed debt funds swoop on Lehman Brothers
http://www.telegraph.co.uk/finance/financetopics/financialcrisis/6184667/Distressed-debt-funds-swoop-on-Lehman-Brothers.html

In a sign that the market believes administrators will extract some value from the wreckage, funds have bought up billions of pounds worth of Lehman Brothers' debt.

By Helia Ebrahimi, Senior City Correspondent
Published: 9:16PM BST 13 Sep 2009

There are hundreds of thousands of Lehman derivative positions where counterparties have claims.

But the creditors have to wait for the administrator to untangle the assets left in the wake of the bank's collapse.


Related Articles
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Derivatives still pose huge risk, says BIS Now, for the first time, funds have begun buying those positions. There are 10 different Lehman derivatives books being traded, with prices as low as 15 cents in the dollar and up to 50 cents in one case.

Tony Lomas, a partner at PWC and lead administrator on Lehman in Europe said interest from distressed debt traders had ballooned in the last month.

"They are all looking for the Lehman pot of gold – and for them the return could be massive."
 

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Yahoo Headline, Lehman: Barclays took $8.2B more than allowed

Lehman says Barclays took $8.2B more than it should have in rushed sale of US banking unit

By Vinnee Tong, AP Business Writer
On Tuesday September 15, 2009, 6:18 pm EDT


<!-- ./end of article hd -->SAN FRANCISCO (AP) -- Lehman Brothers has accused Barclays Capital of taking $8.2 billion more than it should have when it bought key assets of the failed investment bank a year ago.

<!-- Article Related Media -->Tuesday is the one-year anniversary of Lehman's chaotic Chapter 11 filing. The court approved the sale of its U.S. banking business -- estimated to be worth $1.35 billion at the time -- to Barclays less than a week after it filed.

Now Lehman wants a judge to force Barclays to give back some of the money it took as part of the deal, including $5 billion given as extra collateral. Lehman says the extra value was not disclosed to the court.

Barclays spokesman Michael O'Looney says Lehman is making "an opportunistic claim" now that the economy is beginning to stabilize.
 

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Good news for Lehman:

Morgan Stanley sells Lehman claim
By Anousha Sakoui

Published: September 17 2009 19:01 | Last updated: September 17 2009 19:01

Morgan Stanley has sold a $1.2bn claim in the liquidation of the Lehman Brothers estate this week, in a move highlighting the booming market for trading claims and bonds linked to the hundreds of different Lehman entities.

The Morgan Stanley claim was linked to about 10,000 derivatives transactions to which Lehman was a counterparty. It was sold on to about 10 different investors, according to people with knowledge of the trade, at a price of 38.5 per cent of face value, or $462m. Morgan Stanley declined to comment.

http://www.ft.com/cms/s/f7e8f4a6-a3af-11de-9fed-00144feabdc0,Authorised=false.html?_i_location=http%3A%2F%2Fwww.ft.com%2Fcms%2Fs%2F0%2Ff7e8f4a6-a3af-11de-9fed-00144feabdc0.html%3Freferrer_id%3Dyahoofinance%26ft_ref%3Dyahoo1%26segid%3D03058%26nclick_check%3D1&ft_ref=yahoo1&segid=03058&referrer_id=yahoofinance&_i_referer=http%3A%2F%2Fmessages.finance.yahoo.com%2FStocks_%2528A_to_Z%2529%2FStocks_L%2Fthreadview%3Fm%3Dtm%26bn%3D10602%26tid%3D247763%26mid%3D247763%26tof%3D1%26rt%3D1%26frt%3D2%26off%3D1&nclick_check=1
 

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advice please...
I put the order for $2.60 at 12:30pm today and it didn't went through. I saw that the market still stayed $2.60 until 3:23pm?
I called wells fargo and they said because when I placed the order the asking price was $2.95... so it didn't full fill?
anyone please explain this to me?
within 2 hours window, i saw the price is $ 2.60 but why it didn't go through???
 

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advice please...
I put the order for $2.60 at 12:30pm today and it didn't went through. I saw that the market still stayed $2.60 until 3:23pm?
I called wells fargo and they said because when I placed the order the asking price was $2.95... so it didn't full fill?
anyone please explain this to me?
within 2 hours window, i saw the price is $ 2.60 but why it didn't go through???


Which stock, LEHPQ? It's tough to get your hands on the PQs. Bid/Ask is all over the place. They filled some poor innocent soul with 500 shares at $4.96 earlier today, then dropped it down to $4.00 with a 400 share fill. Like I said, when you get your hands on the PQs, you're not gonna want to trade them because they're tough to get back. If you're using an "all or none" qualifier, you're better off without it ... even if its only partial fills and you have to pay extra commissions (they're a tax write-off anyway, btw). Patience will pay off, but if the LEHMQs hit $1, these things will easily be at $20. You need to raise your price is my only suggestion, I'd say like $3.20-$3.50, you'll probably have better luck. GL
 

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Which stock, LEHPQ? It's tough to get your hands on the PQs. Bid/Ask is all over the place. They filled some poor innocent soul with 500 shares at $4.96 earlier today, then dropped it down to $4.00 with a 400 share fill. Like I said, when you get your hands on the PQs, you're not gonna want to trade them because they're tough to get back. If you're using an "all or none" qualifier, you're better off without it ... even if its only partial fills and you have to pay extra commissions (they're a tax write-off anyway, btw). Patience will pay off, but if the LEHMQs hit $1, these things will easily be at $20. You need to raise your price is my only suggestion, I'd say like $3.20-$3.50, you'll probably have better luck. GL


yes, it is LEHPQ .
mmm. I didn't know that you have to put higher price to buy LEHPQ. I thought if i see $2.60 on the market, I should be able to buy it with the same price :)
Thanks for the explanation Kuwl.
I hope I can get it around at $ 3 tomorrow. I only want 1000 share... anyone want to sell?
 

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yes, it is LEHPQ .
mmm. I didn't know that you have to put higher price to buy LEHPQ. I thought if i see $2.60 on the market, I should be able to buy it with the same price :)
Thanks for the explanation Kuwl.
I hope I can get it around at $ 3 tomorrow. I only want 1000 share... anyone want to sell?


FYI, Bid/Ask is now: $4 x $4.88 ... you'll probably have to buy in somewhere in that range today. If she breaks $5, you'll probably miss the boat ... she'll head to $20 within days/weeks after breaking and closing above $5, IMHO.
 

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FYI, Bid/Ask is now: $4 x $4.88 ... you'll probably have to buy in somewhere in that range today. If she breaks $5, you'll probably miss the boat ... she'll head to $20 within days/weeks after breaking and closing above $5, IMHO.


If my math is correct:
lets say I spent $4000 to buy 1000 share of LEHPQ and it went to $20/share that meant I have $16000 in profit
but if LEHPQ $20, LEHMQ will be $1,
if I use my $ 4000 to buy LEHMQ , i would have 20000 share with $.20/share.
and If LEHMQ =$1 I will have about $100000 in profit.

@):)
 

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Is LEHMQ is better than LEHNQ?
if so what is the different btwn them?


LEHMQ is your wildcard, they're the commons and likely to see the least amount of money. NQs are Cap Trusts I believe, dont have the info in front of me right now and kinda busy. It should be posted above somewhere. And your calculations look correct to me. Just times the amount of shares by the Price Predictions we've already made and you'll get your full-dollar amount for your total balance. PQs are one of the best plays since the PQs will get paid before the MQs see anything.
 

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