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What will happen to Lehman Brothers?

September 10, 2008

lehman.jpgLehman Brothers plans to sell a majority stake in its asset management unit and spin off commercial real estate holdings, hoping to restore investor confidence and ensure its survival after reporting a record quarterly loss of about $4 billion.

What do you think will happen to the storied investment bank? A successful recovery? A Bear Stearns-style government bailout? Is Lehman Brothers too big to fail? Give us your thoughts in comments.

Click here for full coverage of Lehman Brothers.

You can also use Hubdub, an online prediction market that allows users to wager virtual cash on the outcome of news events, to make a prediction about whether the government will bail out Lehman Brothers within the next 30 days.

Will the U.S. government bail out Lehman Brothers within the next 30 days?

Comments

Yes, because if they do not the economy will suffer for the HUGE loss. We have encountered enough loss as it is today.

Posted by eric | Report as abusive
 

All of these problems are a result of one man being suckered into a war in the middle east by a guy living in a cave. Osama’s plan is on track like a Swiss watch. Time for us to change horses fast!

Posted by Cleareye | Report as abusive
 

Wow!!! It’s like an Enron flashback, man!

Posted by Jim | Report as abusive
 

You’re asking US to tell you what’s going to happen to Lehman Brothers?

I thought YOU were supposed to be telling us what is happening today and where it might lead.

Some news service! Thanks for nothing.

Jim

Posted by James Dunaway | Report as abusive
 

Federal Reserve Bank is not run by our Federal Government; it is run by “private” bankers? (LOOK who’s below in the list)
The real owners of the Federal Reserve and the Federal Reserve System are:
a) Rothschild Banks of London and Berlin;
b) Lazard Brothers Bank of Paris;
c) Israel Moses Seif Banks of Italy;
d) Warburg Bank of Hamburg and Amsterdam;
e) LEHMAN BROTHERS BANK of New York; (By the way JEB BUSH is also on the board of Lehman Brothers.)
f) Kuhn, Loeb Bank of New York;
g) Chase Manhattan Bank of New York;
h) Goldman Sachs Bank of New York; and
i) Approximately three hundred people, known to each other and/or relations of the “owners,” who hold stock in the Federal Reserve System. They comprise an interlocking, International Banking Cartel of wealth beyond comprehension.

And an interesting quote on the topic -
Thomas Jefferson was concise in his early warning to the American nation, “If the American people ever allow private banks to control the issuance of their currency, first by inflation and then by deflation, the banks and corporations that will grow up around them will deprive the people of all their property until their children will wake up homeless on the continent their fathers conquered.”

Posted by Martha | Report as abusive
 

If Lehman were to fail, there would be trillions of CDS contracts involving counterparty risk not to mention the massive amount of pressure it would place on all types of financial assets.

Credit derivatives is the definition of counter party risk!

If Lehman falls, WM, MER AIG WB will follow.

Would that be good a thing?

Posted by How the Dick Fulds | Report as abusive
 

I am telling you the US is going down, along with europe, this is not even the beginning, investments will be better in Asia and South America, africa still questionable because of bad goverment, anybody on the same page?

Posted by George | Report as abusive
 

The piece from Martha at 12.21 is very informative for this discussion to continue, thanks Martha.

The 158 year old bank, under present chairman and CEO Richard S.Fuld Jr., which was earlier planing to shelve off its priced “Investment Management” division, is now trying to sell the entire company. Will Barclays of UK, and the BOA (Bank of America) bail LB out is the big question. If so these suitors along with many PE (private equity) firms will require an encore from the Fed to reassure,like in the case of Bear Stearn’s to JP Morgan Chase.
The $3.9 billion loss for Q3, does not provide them enough time for the weekend as their plans to split into “good” bank and a “bad”one, which would spin off $30 billion of bad assets into a seperate firm – the “bad” bank to be owned by LB shareholders.LB stock fell another 45 percent after a bank from Korea with major investments, gave the cold shoulder.The question now is would the real estate section of LB to be called Real Estate Investment Global, worth $5-7billion, expected to complete only by next near raise enough funds as part of the “good bank” and the sale of the “money management” section be enough to offset the capital needed to support the “bad bank”.
My fingers are crossed.

Posted by Raja Bose | Report as abusive
 

Speculation, speculation and speculation — 3 answers, and which to choose? Who/what wins when the price of a stock, etc., goes up and down? Not me. The brokerages and agents, including my local one. The financial world is run by the CFR, Bilderbergs, IMF, Trilateralists, etc. After relying on 3 local brokers with my small savings, I have learned one simple lesson — they know zilch. They either talk us into something far too speculative or something that follows the tradition company line – buy it and hold it for 10 years. And many of us simpletons got in when it was at a new high or near low and got out at the opposite end. In the long run I would have been better to find something like a CD giving back about 5 percent over that period.

Posted by jr | Report as abusive
 

Who knows but I hope Lehman Brothers survive for the sake of it’s employers

Posted by Lec Neli | Report as abusive
 

FED are really stuck, they cannot bail out- which will give a way/opporunity for a another bank to seek help- which I probably think the next bank will be ML, they cannot allow a another bank to collapse for the sake of the investors market confidence, they will not want the tax payer to pay extra tax as they have already sucked more from them. But honestly, I dont see this going anywhere…the market is gonna stay weak untill 2010 and there is a major correction in market to be taken place soon.

Posted by poo | Report as abusive
 

I sure hope the government doesn’t bail them out. It scares me to even hear of it being considered. The Fred and Fan situation just encourages mismanagement with the knowledge that bailout is there as an option. I’m no expert on corportate business, and I’m not sure what goes on with these deals, but I think there should be some VERY harsh pentalties to the CEOs/CFOs/presidents/boards/whatever when government bailouts occur. I think these people should all get fired (naturally) but with no severance packages or benefits. On top of that, they should have their wages for the past 5 years garnished and be prevented from working in leadership positions ever again. They need to be made examples of. There needs to be a climate in this country where a bailout is not seen as favorable so that leaders do everything in their power to keep their companies healthy and have the foresight to make sound decisions.

Posted by Jason | Report as abusive
 

The Federal Reserve is not owned by stockholders. The list posted is quite erroneous: Chase Manhattan no longer exists, neither does Kuhn Loeb. Go to college and learn some economics before posting false information.

Posted by Jane | Report as abusive
 

Should The US government bail out American corporations?

Does corporate America share its profits with the tax payers? The answer is absolutely not.
Do they share the profits with the tax payers? The executives are paid millions.
The US Government should bail out all corporations large and small is that right? The answer is no. If it is a viable business, they can raise the money from investors, if not, let them close shop.
If the government decides to bail them out if should be at a cost (like shares in the company) where the government will make money and have a say in running the company. Even better have a public referendum where the voters decide.
Carmakers want money from the government; the financial institutions want money – where does it stop.
It is about time corporate America should learn they have to stand on their own feet. Where is corporate America financial responsibility?
They claim the government is abusing its financial responsibility; it seems Corporate America is no better. They also go to their workers to take a pay cut, is that fair? It seems the little guys are the ones that always pay the price for corporate financial abuse and miss-management.
Other corporations in the world are not asking to be bailed out – they go out of business.
Jay Draiman

 

Not much to add except to clarify the attempt at explaining how stock is dealt with at the Federal Reserve. Here’s a paragraph quote taken from the federal reserve website. “Commercial banks that are members of the Federal Reserve System hold stock in the Reserve Bank in their region, but they do not exercise control over the Reserve Bank or the Federal Reserve System. Holding stock in a regional Reserve Bank does not carry with it the kind of control and financial interest that holding publicly traded stock affords, and the stock may not be sold or traded. Member banks do, however, receive a fixed 6 percent dividend annually on their stock and elect six of the nine members of the Reserve Bank’s board of directors”. This came from the federalreserve.gov website.

Posted by jason | Report as abusive
 

Sorry Jane, you are acting very naive … in theory and text books the Fed is not owned by those stock holders but in reality – yes, they are controlled and influenced entirely by names in that group and others (I am not sure of the names), call it the invisible hand or whatever

Posted by mihir | Report as abusive
 

Who cares about Lehman brothers? The market is too strong for one crappy company to make any real difference. I for one, hope the government stays the hell out of it. Let them fold… who cares.

Posted by Dmennenoh | Report as abusive
 

Finally!
All day on CNN they spoke of the US Government \”bailing\” out AIG.
The US Government NEVER said they would bail out ANYONE!

The Federal Reserve did. And believe what you will, but you do your research you will find out the US GOVERNMENT DOES NOT OWN THE FEDERAL RESERVE. It is a privately owned entity.

They, of course, have the power to bail out ANYONE AND ANY ENTITY because they control the manufacturing of actual currency.

CNN reporting this in this manner is pretty much an all-out LIE.

Posted by Tim | Report as abusive
 

I have some question can someone answer this please
1. When bailout can we still trade on the company
2. When company selling their asset can we still get the common stocks holding price

Posted by Lakshmi | Report as abusive
 

Dear All,
I am quite new in share trading and would like to enquire on what will happen to lehman share after the bankruptcy? Any more value to it? or it will flush down to zero soon?
Thank you.

Posted by Freeverse | Report as abusive
 

What will happen to their subsidiary, Aurora Loan Services? Please tell me they will be drug into the bankruptcy as well!

Posted by Mark | Report as abusive
 

I would like to ask one question:
what will happen to lehman share after the bankruptcy? I bought some stocks of Lehman and what should I do now?
any points will be greatly appreciated

Posted by wayne | Report as abusive
 

What will be the status of the preferred stock?

 

from a historical point of view, it’s hard to object to the government’s mass bailouts since similar debt-producing methods were used to bring the U.S. out of the Depression…

 

I am 70 invested in lehman bonds, what are my chances of collecting, any advise welcome Thanks

 

I also have 70+ invested in lehman bonds. my edward jones man said “wait til it settles” dammit that is all i have ever had! wait til it settles??? omg i am so afraid.

Posted by gayle | Report as abusive
 

Nobody wants a bailout unless they have a vested interest. I dont have a loan I couldnt pay, I didnt overextend myself guys. All I did was take what my veteran uncle who served with Patton in the 40′s left to me, from his savings, and invest it the way he already had, thru bonds at Edward Jones…. tell me what i did wrong in order to pay this price?

Posted by gayle | Report as abusive
 

they are bailing out because these politicians money were in these independent investment banks.

Posted by alice Reyes | Report as abusive
 

I feel stupid. Number one after i learned that Jeb Bush was an advisor for Lehman? Good heavens if a Bush was involved it was bound to be a train wreck. Shoulda done my homework. Makes sense Alice. Wish i had a cd insured at whatever rate i could of got. Too late now.

Posted by gayle | Report as abusive
 

I just brought Lehman Brothers stock at 20 cents a share I know that there is a risk involved in even this amount the posibility of me losing it all but what if since Barclays just brought a piece of the company what if the stock starts to go up. 20 cents its worth it to me to take a chance thats less than a cup of coffee per share all it has to do is make it to 25 cents and i have made a 25 percent return.

Posted by Daru | Report as abusive
 

lehman brohers should bring back all its debtd from various banks..

Posted by mich | Report as abusive
 

After talking to my Edward Jones man yesterday he advised “no worry”. Looking like the return will be more than 75%. Ok so what about some of these other investments I have with them? Mutual funds, a franklin bond. Anyone have an insight as to whether I should be concerned about these?

Posted by gayle | Report as abusive
 

Gayle, I would not worry about this. Mutual funds are generally long term investments, so they will always have the opportunity to increase overtime. The Lehman Brothers is crashing, yes, but knowing the government and it’s current thoughts towards the economy it will get bailed out; either this or get bought by another company. The latest news is that it’s planning on selling some loans to a bigger firm in hopes to re-stabilize itself.

 

With the various assets of Lehman being sold off, parts of the co. restructuring, etc., what is the outlook for LEH stock?

Posted by Tinman | Report as abusive
 

Thanks Luke. I hope you are right. I am meeting with ‘the man’ Monday. I hope i dont get a lot of double talk. My father has a lot more invested there than i do and he (84 years old) is wanting to know what to do. We both wish we had things spread out in banks nothing more than 100 tho so it would be fdic insured at this point. But pretty sure pulling out of Edward Jones we would take a huge hit.

Posted by gayle | Report as abusive
 

what is the future of this share?
will it cross $10 at the end of this year as estimated by analysts.

Posted by saad | Report as abusive
 

what will happen to Lehman share after the bankruptcy? I bought some stocks of Lehman and what should I do now?

Posted by lena | Report as abusive
 

I think Lehman will go up in sometime…..
Donot sell it!

Posted by saad zahid | Report as abusive
 

I still stand behind believing that they will go up… The government bail out is a go as of now, so without having dead loans on it’s hands, it will be able to almost clean itself up so it can operate at its optimal performance. It’s almost a government-sponsored load purge if you will.

 

Now with the new president, the situation will have to clear out quickly for all companies that wait funding. I am anxious to see how this will be handled by the new administration.

 

Does anyone know what’s happening in the Lehman Bros bankruptcy case? I had some stock and cash with them back in Sept 2008 when they went bust.

Posted by Barry | Report as abusive
 

Something is happening as the stock has gone up from 1 cent to about 22 cents currently with a high of 33 cents in August and a volume of 128 mil or so. But what is the question?

Posted by angie | Report as abusive
 

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