Sunday, September 21, 2008
Affirmative
2 Comments:
By 
Escort81, at
Sun Sep 21, 12:17:00 PM:
Mindles - And the "ubiquity" feature of AIG paper everywhere (and also its many business lines in insurance) is why the feds stepped in for it but not for Lehman, since Lehman was not as interconnected?
The investment banking side of Lehman (M&A advisory and corporate finance / underwriting) was a pretty good group. Unfortunately for it, it was a little group attached to a big hedge fund. Full disclosure: the (now former?)Global Head of IB at Lehman was a classmate and fellow Cheeser.
It will be interesting to see what kinds of new regulations come out of this mess. One of the important regs coming out of the 1930s (with the creation of the SEC) was a limit on margin buying for stocks, so that only so much leverage was allowed into the system. Financial institutions have been able to synthetically create leverage in other ways (including outside of the equity markets), so perhaps new regs will go after those methods.
By Andrew Hofer, at
Sun Sep 21, 05:28:00 PM:
Lehman paper was in a lot of funds as well, although by the time September rolled around, most of the money funds refused to buy it. Hence their need to file - they couldn't roll over CP.
AIG's emergency was due to collateral calls, not a refinancing problem (not yet, anyway).
