Treasury Reportedly Calls on Wall Street Banks To Back Lehman (LEH)
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U.S. Treasury Secretary Henry Paulson and NY Federal Reserve Bank President Timothy Geithner pressured the heads of Wall Street's biggest firms to find a solution to fix the Lehman Brothers (NYSE: LEH) situation.
New York Fed spokesman Andrew Williams said talks between the government and the banks are continuing today. Last night's meeting between Wall Street execs and the government began at approximately 6 p.m. with Kendrick Wilson, the former Goldman Sachs (NYSE: GS) executive whom Secretary Paulson hired las an adviser during this financial malaise, helping lead discussions. Hopefully, an agreement will be reached tonight or the 5pm deadline I reported that Andrew Ross Sorkin mentioned last night on Kudlow & Co.
At last night's meeting of the minds, Geithner and Paulson presented two scenarios. The first option and less preferred scenario was a forced liquidation of Lehman Brothers, which they noted could likely spread trouble and cause investors to sell shares in other investment banks, reported Bloomberg. No specific banks were mentioned, but as we mentioned earlier this week, Merrill Lynch (NYSE: MER) could be the next target of this panic selling in the financial sector.
However, Paulson and Geithner prefer a different scenario, where other banks contribute monies to a 'bad bank' to take assumption of Lehman's poor real-estate assets. This method is actually similar to what Dick Fuld proposed on the conference call earlier in this week. If Lehman and the government can convince the large banks to assume Lehman's 'bad assets', then that would make a deal with Barclays PLC (NYSE: BCS) or Bank of America buying Lehman a lot easier.
Bloomberg said that Paulson and Geithner presented those two options, after took questions from the executives and none of the Wall Street execs offered their opinions. The meeting ended with the bank heads agreeing to work over the weekend and then they'll know what they are able to do. According to sources, a decision is still required before market open on Monday.
Some of the executives that were in attendance included Morgan Stanley (NYSE: MS) CEO John Mack, Merrill Lynch (NYSE: MER) CEO John Thain, JP Morgan (NYSE: JPM) CEO Jamie Dimon, Goldman Sachs (NYSE: GS) CEO Lloyd Blankfein, Citigroup (NYSE: C) CEO Vikram Pandit and representatives from the Royal Bank of Scotland Group PLC and Bank of New York Mellon (NYSE: BK).
Spokesmen for the SEC and NY Fed aconfirmed that last night's meeting took place with ``senior representatives of major financial institutions,'' and declined to comment further.
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New York Fed spokesman Andrew Williams said talks between the government and the banks are continuing today. Last night's meeting between Wall Street execs and the government began at approximately 6 p.m. with Kendrick Wilson, the former Goldman Sachs (NYSE: GS) executive whom Secretary Paulson hired las an adviser during this financial malaise, helping lead discussions. Hopefully, an agreement will be reached tonight or the 5pm deadline I reported that Andrew Ross Sorkin mentioned last night on Kudlow & Co.
At last night's meeting of the minds, Geithner and Paulson presented two scenarios. The first option and less preferred scenario was a forced liquidation of Lehman Brothers, which they noted could likely spread trouble and cause investors to sell shares in other investment banks, reported Bloomberg. No specific banks were mentioned, but as we mentioned earlier this week, Merrill Lynch (NYSE: MER) could be the next target of this panic selling in the financial sector.
However, Paulson and Geithner prefer a different scenario, where other banks contribute monies to a 'bad bank' to take assumption of Lehman's poor real-estate assets. This method is actually similar to what Dick Fuld proposed on the conference call earlier in this week. If Lehman and the government can convince the large banks to assume Lehman's 'bad assets', then that would make a deal with Barclays PLC (NYSE: BCS) or Bank of America buying Lehman a lot easier.
Bloomberg said that Paulson and Geithner presented those two options, after took questions from the executives and none of the Wall Street execs offered their opinions. The meeting ended with the bank heads agreeing to work over the weekend and then they'll know what they are able to do. According to sources, a decision is still required before market open on Monday.
Some of the executives that were in attendance included Morgan Stanley (NYSE: MS) CEO John Mack, Merrill Lynch (NYSE: MER) CEO John Thain, JP Morgan (NYSE: JPM) CEO Jamie Dimon, Goldman Sachs (NYSE: GS) CEO Lloyd Blankfein, Citigroup (NYSE: C) CEO Vikram Pandit and representatives from the Royal Bank of Scotland Group PLC and Bank of New York Mellon (NYSE: BK).
Spokesmen for the SEC and NY Fed aconfirmed that last night's meeting took place with ``senior representatives of major financial institutions,'' and declined to comment further.
Be the first to know what happens with Lehman Brothers and sign up for free at EasyStockAlerts.com
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