{"id":194542,"date":"2008-09-15T19:24:00","date_gmt":"2008-09-16T00:24:00","guid":{"rendered":"https:\/\/www.panix.com\/~msaroff\/40years\/2008\/09\/15\/why-save-bear-stearns-and-not-lehman\/"},"modified":"2008-09-15T19:24:00","modified_gmt":"2008-09-16T00:24:00","slug":"why-save-bear-stearns-and-not-lehman","status":"publish","type":"post","link":"https:\/\/www.panix.com\/~msaroff\/40years\/2008\/09\/15\/why-save-bear-stearns-and-not-lehman\/","title":{"rendered":"Why Save Bear Stearns, and not LEhman"},"content":{"rendered":"<p>Buried in a very good <a href=\"http:\/\/angrybear.blogspot.com\/2008\/09\/roubinis-not-wrong-but.html\">post by the Angry Bear<\/a> is this little gem:<\/p>\n<blockquote><p>But the effect of LEH going out of business would not be so severe as the effect of BS going out of business for one reason that Roubini, for some reason, appears not to have mentioned.<\/p>\n<p>Lehmann has no clearing business.<\/p>\n<p>Had Bear gone out of business,<span style=\"font-weight: bold;\"> <\/span><span style=\"font-variant: small-caps; font-weight: bold;\">about 30% of the hedge funds in the country would not have been able to execute virtually any transaction for the following thirty days<\/span>. Not a payment. Not a redemption. Not a trade on a listed exchange. Not a receipt. Not a de-leveraging. Not a swap payment, not a CDS payment, not fulfilling an option exercised against them.<\/p>\n<p>There&#8217;s not just a &#8220;maybe&#8221; about financial collapse in such a scenario; P probably well in excess of 0.9944. $30 billion is a &#8220;bargain&#8221; in such a situation.<\/p><\/blockquote>\n<p>(<span style=\"font-style: italic;\">emphasis mine<\/span>)<\/p>\n<p>Bear Stearns was a surprise.  Lehman was <span style=\"font-weight: bold;\">not<\/span>.  This has been bubbling up for months, and the firms have been able to create contingencies to allow for trading in the departure of the firm from the market.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Buried in a very good post by the Angry Bear is this little gem: But the effect of LEH going out of business would not be so severe as the effect of BS going out of business for one reason that Roubini, for some reason, appears not to have mentioned. Lehmann has no clearing business. &hellip;<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1004,985],"tags":[],"class_list":["post-194542","post","type-post","status-publish","format-standard","hentry","category-finance","category-regulation"],"_links":{"self":[{"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/posts\/194542"}],"collection":[{"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/comments?post=194542"}],"version-history":[{"count":0,"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/posts\/194542\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/media?parent=194542"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/categories?post=194542"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/tags?post=194542"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}