I'm out of the loop, I admit, but simple question: Why can't LEH just borrow from the fed to meet funding needs until they recapitalize? I know they've not used the window at all, and they do have access. Is it now absolutely verified the Fed will *not* loan to LEH at this point? I've read that *nowhere*. On one hand I read LEH has hired bankruptcy attorneys on Saturday - on the other hand I hear Fuld says they are well enough capitalized. Seems like the press is running the perception right now. In the end, if the fed will loan to LEH, then I see no reason why LEH's hand has any reason to be forced. So again: is it implied that the fed will not loan to LEH here?
they need to pledge 'good assets' in the window, they cant use their commercial RE junk so its not infinite liquidity. nobody will do business with them anymore because they lost confidence. the fed can only lend money to instutions which are going concern, a firm that lost all their creditors dont qualify. by that criteria if you need the window to live the fed doesn't have the authority to lend you
But most of their assets are certainly -not- commercial RE ... And they certainly have not lost all of their creditors ...