http://www.cnbc.com/id/39196023 A friend sent be the above article. Does not surprise me. The fools LEH, easy money for a house policy, et all...are back at it again. And it will be funny or more like sad to watch the Country Make the same mistake once again, imploading more future debt and destroying more private industry from their Bullshit Shell Games.
I have just finished The House of Cards, about Bear Sterns... Now what is the mathematical chance that only those 2 investment banks are allowed to fail/takeovered who didn't contribute (BS) or contributed less (LB) to the LTCM bailout??? It is hard to prove, there was a conspiracy, but the other banks hated BS for not giving 200 millions during the LTCM crisis days...And we still don't know where the rumours started that caused the run on the bank in 2008 March...
Re LTCM from Wiki. Seeing no options left the Federal Reserve Bank of New York organized a bailout of $3.625 billion by the major creditors to avoid a wider collapse in the financial markets.[21] The contributions from the various institutions were as follows:[22][23] $300 million: Bankers Trust, Barclays, Chase, Credit Suisse First Boston, Deutsche Bank, Goldman Sachs, Merrill Lynch, J.P.Morgan, Morgan Stanley, Salomon Smith Barney, UBS $125 million: Société Générale $100 million: Lehman Brothers, Paribas Bear Stearns declined to participate. But let's suppose LEH didn't participate and wiki ref is incorrect. LEH and BSC were collateral then liquidity issues of there own accord. I haven't read any mention of a Vendetta outside of a few opinions on the net. But hey you never know, might be something no one would mention for obvious reasons.
The book says there were 16 banks gathered (your list has 15) and each was supposed to give 200 millions to LTCM. Cayne the BSC guy told them not to go alphabetically, because they were the 3rd one, and he had to decline. Once he did, the others were pissed and all kind of negotiations went down, but he kept according to the vote of his managers earlier, not to participate.When they didn't participate and LEH gave only 100, the others had to give more and they never forgot it... At that time they didn't know if it was going to be a complete loss or what, but it was for surviving the whole crisis altogether. It was to save the system, but BSC was always a different kind of bank. I can see that eventually that caused their demise...
Nice story. -------------- Once you get interested in the way capitalism works, you notice that the stories it throws up have two features: they're always the same; and yet they're full of amazing details that no one would dare invent. The collapse of the US bank Bear Stearns, for instance, is on the one hand a familiar story - bank accumulates bad debt, is found out, implodes - and on the other a treasure chest of wonders and ironies. Companies, even huge financial companies like Bear Stearns, have personalities, and the personality of Bear, the fifth-largest US investment bank, was bullish, chest-out, cigar-chomping, macho, and unlovable. In 1998, the hedge fund Long-Term Capital Management - which would better have been named Short Term Crazy Betting - blew up. It had available cash of $500m but had borrowed and leveraged so extensively that it was holding contracts worth an apocalyptic $1.25tn. The president of the Federal Reserve Bank of New York, William McDonough, got together the heads of the big US banks at his offices, and essentially demanded that they rescue LTCM. This was a moment for the fat cats and Wall Street oligarchs to demonstrate their public-spiritedness by risking their own money to rescue LTCM from its own mistakes, and in the process avert the risk of a global meltdown. The first banker to speak was James Cayne the (literally) cigar-chomping head of Bear Stearns. He was in a good position to know the gory details about LTCM's derivative holdings, because Bear Stearns cleared LTCM's trades. Cayne said no. He refused to help LTCM. The other bankers went berserk. But Cayne didn't budge, and in the process uttered a magnificently menacing line: "Don't go alphabetically if you want this to work." So the other banks bailed LTCM out, and did not love Bear Stearns for not doing so, and at least one person in the meeting openly vowed revenge. http://webcache.googleusercontent.c...+stears+ltcm+revenge&cd=5&hl=en&ct=clnk&gl=us
Paulson should never let lehman fail, it was the single biggest mistake in the financial crisis, on top of taxpayer money wasted, the reputational damages and overall us financial system took a major hit that will take decades to recover. Lehman was basically handed over to the foreign firms - barclays and nomura. It's like the emperor with the invisible cloth, everyone knows right now paulson fucked up yet noone is willing to admit it. What a shitshow.