Reinventing the Millennium

Chapter 920 The Death of Lehman (4k)

Fang Zhuo waited for the storm on an ordinary morning in Xiangjiang.

An hour later, the meeting on the other side of the ocean was held as scheduled.

The main convener of this meeting is New York Fed President Geithner, and the theme is the discussion on Lehman's rescue.

New York time is Friday, September 9 at 12:[-] pm, and there is not much time left for everyone.

Judging from the current situation, the stock market is closed on Saturday and Sunday, and when the market opens on Monday, Lehman is likely to collapse.

As of Friday's market break, Lehman's stock was trading at $3.43.

At the same time last year, Lehman shares were trading at $70.

How did it get to this point?

In the first quarter of this year, Lehman also announced a net profit of US$17 billion, which was a sharp drop of 57% compared to the previous quarter.

In the second quarter of this year, Lehman suffered its first quarterly loss in 14 years, with a loss of US$28 billion.

In the third quarter disclosure two days ago, Lehman lost $39 billion and announced a number of restructuring plans.

During this period, Lehman has been trying to save itself and find funds, but no matter whether it is financing from bank credit or issuing preferred shares, the stock price will fall every time it receives money.

In this way, 95% of the market value was lost.

What really directly triggered the bailout discussion meeting was that Lehman was unable to obtain capital injection from the Korea Development Bank.

Lehman alone was completely unable to obtain any funds that could help.

After the two companies, the problem of investment banks is placed in front of the Federal Reserve.

Fannie Mae and Freddie Mac have been announced to take over, now do you want to provide Lehman with additional help?

Although President Geithner of the New York Fed is the convener of this important meeting, the US financial steward Paulson is the person with the most status at the scene.

At the beginning of the meeting, Paulson directly broke everyone's expectations, and simply stated: "Don't expect the government to allocate funds. The protagonists who solve the problem today are you."

He said extremely forcefully: "If Lehman is gone, our life will be difficult, and your life will be even more difficult."

There have been rumors that Lehman will receive special help from the government.

Paulson's words shredded the rumors.

He has exchanged views with Federal Reserve Chairman Bernanke this morning, trying to avoid Lehman collapse in chaos, but only encourages financial companies to solve their own problems.

Bernanke was not present at the meeting.

But Geithner of the same system represented his attitude. After Paulson, he briefly said: "The Federal Reserve will not provide special credit support."

He looked at the silent crowd and said threateningly: "If you can't find a suitable solution, panic will spread when the market opens next week, a local problem will turn into a disaster, and the entire financial system will be destroyed." will be at risk."

First Paulson, then Geithner.

First the U.S. Treasury, then the Federal Reserve.

Their attitude is to keep their wallets tight and force Wall Street's financial giants to pay to rescue Lehman.

If you don't save them, you just wait to die.

If you don't save us, we will be criticized in office, and what you will lose is real money.

The bloody smell of the Lehman crisis has reached the tip of the nose!
However, Paulson's face was serious, and he threw out a warning and a bottom line, which was still regarded as a game strategy by everyone present.

Many financial giants present here are not in a hurry to express their opinions. Of course, rescue must be rescued, but how to save, how much to save, and how to maximize their own interests all require more precise discussions and more transparent information.

The discussion of the underlying framework is here.

More transparent and detailed information will go next door.

The closed-door meeting of the New York Fed lasted two hours.

Then it was to go to the reception of Fuld, the head of Lehman.

The reception was held at the Four Seasons Hotel. At the same time, there will be an accounting team composed of Goldman Sachs and Credit Suisse to evaluate Lehman's real assets.

Fuld used to be a very personable boss, nicknamed "Gorilla".

However, at the reception, he was more like a nimble monkey, frequently making promises to the heads of various families.

"As long as BNP Paribas gives me money, I can talk about any business!"

"Are you Mellon Bank afraid of defaulting? Haha, don't worry, if there is any problem with the first 50 billion, we, Lehman, will repay it all."

"What? It's still expensive? Citigroup, you guys are too dark at this time, I know Lehman has to pay the price, okay, okay, let's make another 20%!"

The terms of Fuld's negotiations are often 50 billion or 2% of the price, but the more this is the case, the more specious attitudes from these financial bigwigs.

He didn't bother to lament the difference in the situation at this time, and he only wanted to get the last hope of capital injection for Lehman.

Fuld is well aware of the current situation. The government hopes that a hero will stand out from Wall Street, or that various companies will jointly provide financial support or guarantees to assist a hero in the acquisition of Lehman.

And this group of people on Wall Street hope that the government can provide part of the financing, the more the better.

The lobbying at the reception seemed a bit lonely, but the other families had their tongues against each other from time to time.

When Fuld felt tired, everyone also moved to the meeting room. It was almost early morning, and the work of the accounting team in the next room was coming to an end.

The accounting teams of Goldman Sachs and Credit Suisse were composed of accountants and lawyers, who reviewed assets one by one and questioned Lehman executives mercilessly.

At 0:13 in the morning, the accounting team finished asking the final questions and needed to discuss and issue a report.

Ryan, the head of Lehman's commercial real estate business, was kicked out, walked into the meeting room, and met Fuld, the head of the business.

Fuld gave the former general a questioning look.

Ren couldn't say anything, but shook his head slightly with a worried expression.

Everyone else in the conference room noticed this scene, exchanged glances, and each estimated the situation in their hearts.

From eight o'clock in the evening until the early morning, everything that should be said has been said, and the basic statement that should be given has also been given. Everyone is quite tired, but they are also waiting for the final result.

On the 13th, Saturday, New York time, at 01:30 am, the accounting team finished its work, and a representative of Goldman Sachs walked into the meeting room where the bigwigs gathered, and read out the final report.

Among them, the sentence "Lehman's current assets of more than 300 billion US dollars are actually only worth 65% of the book value, or even lower" made the atmosphere in the conference room drop to freezing point.

Such an assessment is far from the figure of Lehman chief Fuld, and is also very different from the currently discussed acquisition framework led by Bank of America, which has initially agreed to use part of the loan plus equity for the acquisition. Lehman's takeover.

This means that the basis of previous discussions no longer exists, and the already weak trust is destroyed again.

There were whispers in the conference room.

Bernanke, who arrived after the reception started, asked Paulson in disbelief: "Did Goldman Sachs deliberately lower the price?"

Although Paulson is not the head of Goldman Sachs now, he undoubtedly controls the direction of Goldman Sachs.

Paulson said nothing.

Instead, Geithner next to him said, "Credit Suisse is still present in this calculation, which only proves that Lehman's problem is bigger than imagined, and we should solve the problem faster."

Bernanke frowned deeply, and looked at the Bank of America, which was pushed out this time, who had already crossed the table to denounce Lehman's Fuld.

"Talk again during the day." Paulson said to Bernanke, got up and walked to the door of the conference room.

Behind him was Lehman Fuld's retention and inquiries from many financial bigwigs.

However, Paulson still left the meeting room without saying a word.

People from Wall Street surrounded Fuld, but Sean from Merrill Lynch quietly pulled the Bank of America people aside at this time. Lehman had so many problems. Anyway, Bank of America came up with an acquisition plan. Why not use this money to buy Merrill Lynch.

Merrill Lynch went bankrupt much earlier and filed for bankruptcy in July. However, it was treated differently from Lehman. It first received a guaranteed loan from the government, and then received capital injections from various funds and multinational investment institutions. It was temporarily rescued in an emergency return.

But this does not mean that the problem is completely solved.

Since Lehman is not sincere, let us be acquired first, so that Paulson, Bernanke, Geithner and other bigwigs won't waste so much time.

Once the framework is set up, just change the object.

In the early hours of the 13th, Merrill Lynch was in action.

At the same time, Xiangjiang is 02:30 in the afternoon.

Fang Zhuo received news from different channels one after another, but Geithner's spokesperson, Austin, was the most accurate and dramatic, such as "Paulson's black face", "Fuld's face", "Bank of America's helplessness"...

At night in Xiangjiang, Fang Zhuo was still waiting for Austin's call while admiring the scenery.

This time, however, halfway through the phone call, Geithner himself was on the other end.

"Bank of America gave up the acquisition of Lehman, and instead acquired Merrill Lynch!" Geithner talked about the latest shocking news.

Fang Zhuo said flatly, "Wow."

"You don't seem surprised?" Geithner sensed the tone.

"I just think that anything can happen now, and it's unexpected that Lehman has come to this point." Fang Zhuo said regretfully, "Lehman has been ruined by Fuld for a century."

Geithner couldn't tell how much truth there was in this business sentiment. He knew what Fang was doing all the time, and he was immediately worried about what Fang was doing: "It's just on the verge of destruction. The Bank of America's acquisition of Merrill Lynch is also not bad."

Fang Zhuo's slight surprise disappeared after turning around. Also, for the Federal Reserve, at least Merrill Lynch's problem has been properly resolved.

Geithner continued: "Barclays Bank of the United Kingdom has given a new offer. They will buy Lehman's North American business at a price of 100 billion, provided that the toxic assets are divested."

"That's the business with the best cash flow at Lehman." Fang Zhuo is very familiar with Lehman's situation.

"No way, as long as Barclays is willing to pay, Lehman will accept it if he doesn't accept it." Geithner's tone was rather vicious, and then he calmed down his anger and said as if talking about a very ordinary thing, "Fang In short, are you willing to participate in the disposal of Lehman's toxic assets? We are looking for a strong buyer."

This is the main reason Geithner participated in the call, Lehman is going to be eaten.

Fang Zhuo didn't know whether to laugh or cry, and while reaching out to take the tea handed over by the secretary, he muttered, "What form will Lehman's 'toxic assets' be disposed of?"

There are also less toxic parts of toxic assets.

It's just that he didn't expect Geithner to offer the invitation so eagerly.

It seems that the very sure Bank of England, as the last guarantee for the acquisition of Lehman, has begun to consider the interests after the Lehman incident.

However, this "Lehman incident" is obviously more impactful than anyone imagined.

"Subscription, auction, we are also considering whether to introduce short-term asset-backed securities loan mechanism." Geithner is really serious.

Fang Zhuo suppressed the absurdity in his heart, and also seriously chatted with the president of the New York Fed about the issue of toxic assets.

Obviously, as close earning partners, how to define and allocate toxic assets is a vague and lucrative matter.

Fang Zhuo could only thank the invitation and expressed his willingness to let the funds participate in a small wave of food sharing.

By the time this even somewhat pleasant conversation was over, there was only one problem left.

Will British Barclays Bank acquire Lehman Brothers' North American business as agreed?
Fang Zhuo rejected all the activities at night and watched "Swan Lake" with a projector in the hotel. Among them, a black swan Odile danced solo, which made him applaud frequently.

However, the movements of Barclays and Lehman were relatively sluggish, and they did not wait for definite news until they fell asleep in the early morning.

Fang Zhuo thought about this before going to bed. Lehman's bankruptcy was imminent, and it had reached 99.99%.

At 05:30 in the morning, the sea surface of Victoria Harbor was already shining with sunshine.

Fang Zhuo, who had a shallow sleep this time, was awakened by the sound of the phone, but this time it was from Kong Yu.

"Mr. Fang, Mr. Fang, I heard that Barclays' plan to acquire Lehman was rejected by the British Banking Regulatory Authority!" Kong Yu's voice was very excited.

"How do you know?" Fang Zhuo yawned and walked to the French window.

"It's all going crazy, it's all going crazy!" Kong Yu couldn't help raising his voice, "It seems to be news from the UK, Mr. Fang, do you think the US authorities will come up with new plans?"

At 05:30 in the morning of Xiangjiang at this time, it was still the night of the 13th in the United States.

"I don't know, you are the first one to call, you must be crazy busy there." Fang Zhuo could imagine the phone ringing one after another in various offices.

Perhaps, Fuld was crying?Geithner in a rage?What does Paulson think?
Fang Zhuo's thoughts were pulled back by the phone, and he said, "Just wait, I believe there will be definite news soon."

Kong Yu let out a "huh", hung up the phone, and desperately continued to search for the latest news from various channels.

Fang Zhuo didn't inquire, but wanted to hear official news.

When the news from various companies came out frequently, Geithner, who was extremely busy, unexpectedly called.

"The Bank of England will not buy Lehman anymore. The Federal Reserve has decided not to carry out a bailout. Lehman will declare bankruptcy tomorrow." Geithner said in a low voice.

Fang Zhuo immediately asked: "Wow, then are we going to dispose of more toxic assets?"

Geithner was taken aback: "..."

He remained silent and didn't know how to answer, and finally hung up the phone directly with complicated emotions.

On Sunday morning, September 9, New York time, the British Banking Regulatory Authority rejected Barclays' acquisition plan, and the Federal Reserve decided to voluntarily abandon all potential commitments to Lehman.

Lehman was determined dead.

However, this still requires the body to announce its own death the next day.

(End of this chapter)