Bailout Watch 46: Lehman Brothers Goes Down
Think GM has it bad? Or that they’re too big to fall? Think again. Lehman Brothers has just announced it’s filing for Chapter 11 bankruptcy protection. The 158 year-old bank decided to exercise the nuclear option after attempts at bailouts and takeovers failed. Lehman Brothers owes $128b in debt, which will probably be paid out at 60 cents on the dollar. (For reference, General Motors has $43b in long term debt). Thousands of Lehman workers were fired immediately after the Chapter 11 filling. The rest were told that they will be paid through Friday, at the most. John McCain – who probably realizes getting New York’s delegates is beyond the limits of reality – told the International Herald Tribune that he was “glad to see that the Federal Reserve and the Treasury Department have said no to using taxpayer money to bail out Lehman Brothers.” Floyd Norris from The New York Times reminds us that Lehman claimed it had ample capital and liquidity as late as last week. Sound familiar? It should. General Motors is in a similar predicament– only worse. Along with Bear Stearns and Merril Lynch, incidents like Lehman are using-up the market’s feelings of shock and surprise at major business failure. If General Motors is hoping for a bailout, they had better get on it soon, or no one will throw money in their direction, even post-C11.
Immensely bored law student. I've also got 3 dogs.
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