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alstry (35.68)

$85 BILLION bad bank?????

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September 14, 2008 – Comments (5)

From the WSJ: 

Under a plan that was crystallizing Sunday, either Barclays PLC or Bank of America Corp. would buy Lehman's "good assets", such as its equities business, people familiar with the matter say. Lehman's more toxic, real-estate assets would be ring-fenced into a "bad" bank that would contain about $85 billion in souring assets. The move would avert a flood of bad assets deluging the market, damaging the value of similar assets held by other banks and insurers.

$85 billion in souring assets????  From just one firm.  That is more than the total reported net assets of every public homebuilder.  How much of our economy is simply BS??????????????

Now you know why it is so important that accounting is fair and accurate.  At this point, few really know what is solvent and what is not anymore????

No wonder there is every fricken banker scrambling around New York this weekend freaking out.

5 Comments – Post Your Own

#1) On September 14, 2008 at 9:36 AM, dinodelaurentis (57.09) wrote:

BWAHAHAHAHAHAHAHAHAHAHAHAHAH!!!

sorry, that slipped out.

it's all just numbers isn't it. as long as we don't admit or claim it, it doesn't exist. NOW the worst is behind us.

riiiiiight.

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#2) On September 14, 2008 at 10:43 AM, Turtleread (64.54) wrote:

Jeez, I never thought LEH had $85B in bad loans.  Wasn't it the smallest investment house on Wall St.?  Whoever the next President is going to be had better have a crack economic team and a Treasury Secretary who's up to the task of "clean-up on aisle 5."

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#3) On September 14, 2008 at 11:27 AM, alstry (35.68) wrote:

The real question American citizens should ask is why can't we as individuals segregate our bad loans and assets and hand them off just like the government is assisting the banks.

Doesn't the United States Constitution provide equal protection for all?????

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#4) On September 14, 2008 at 12:26 PM, kdakota630 (33.34) wrote:

And then the gov't takes over the "bad bank" part?

If that's the direction that this one is headed, I don't think I'll be too thrilled with the end result.

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#5) On September 14, 2008 at 10:23 PM, angusthermopylae (42.43) wrote:

The move would avert a flood of bad assets deluging the market, damaging the value of similar assets held by other banks and insurers.

And that, my friends, is the whole problem.  If you're the laissez-faire type, then sinking a bank or two will severely damage other banks.

If you're the government-interventionist type (a rare creature around here, apparently), then remember:  Whack-a-mole is not a game with any long term benefits.

Sounds like Paulson is thinking about this.  Too late?  We'll just have to wait and see.

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