Its Friday night after a long week, and we all have things to do. But I couldn’t sign off without passing along these two tidbits:

1) Lehman received offers for its asset-management unit from private-equity firms, including Bain Capital and Clayton Dubilier & Rice.

2) The Fed canceled their usual Friday night poker game, and instead called an Emergency meeting.

Here are the details, first on the Private Equity bid, via Bloomberg:

"The bids value the unit, which includes the Neuberger Berman fund business, private-equity funds and a brokerage firm serving wealthy individuals, at about $5 billion, said the people, who asked not to be named because the auction is private. KKR & Co. LP, which was weighing an offer, hadn’t made a bid by the 5 p.m. deadline, the buyout firm told people involved in the process.

Lehman said Sept. 10 it would sell 55 percent of the investment unit, part of Chief Executive Officer Richard Fuld’s plan to keep the 158-year-old firm independent. After its shares dropped 53 percent in the next two days, Fuld, 62, began talks with companies including Bank of America Corp. to sell all of Lehman, potentially derailing the investment-management auction. . . . Blackstone and Carlyle Group had weighed bids for the investment unit and opted to stay out of the auction."

Emergency Federal Reserve meeting, via WSJ:

"The Federal Reserve Bank of New York held an emergency meeting Friday night with top Wall Street executives to discuss the future of venerable firm Lehman Brothers Holdings Inc. and the parlous state of U.S. financial markets.

In attendance were New York Fed President Timothy Geithner, Treasury Secretary Henry Paulson, Securities and Exchange Commission Chairman Christopher Cox, Morgan Stanley Chief Executive John Mack and Merrill Lynch Chief Executive John Thain, among others."

Note that at this point there is the faint air of LTCM about the room. (Ahem). WSJ continues:

"The meeting began at 6 p.m. but precise details about what was discussed could not be learned. The meeting appeared similar to one a decade ago when the New York Fed pulled together top Wall Street executives to prevent the collapse of hedge fund Long-Term Capital Management.

One big issue: Most of the firms at the meeting have themselves been hit with big losses and may not have the excess capital to step in. (talk about understatement)

"Senior representatives of major financial institutions met at the Federal Reserve Bank of New York Friday evening to discuss recent market conditions," a spokesman for the New York Fed said.

The future of Lehman could open a new chapter in the government’s handling of the financial crisis, which is sweeping up an increasing number of firms, including American International Group Inc. and Washington Mutual."

I assume the crew won’t waste a bailout announcement on a Friday eve or Saturday, as there are no markets on the planet that are open 9at least none that matter).

Our new national slogan is: If its Sunday, it must be bailout.

Disclosure: Short AIG



Lehman Investment Unit Gets Bids From Bain, Clayton
By Jason Kelly and Jonathan Keehner
Bloomberg, Sept. 12 2008

New York Fed Holds Emergency Meeting On Lehman’s Future
WSJ, September 12, 2008 9:10 p.m.

Category: Bailouts, Corporate Management, Credit, M&A, Valuation

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

23 Responses to “Lehman Gets PE Bid; Friday Night Fed Meeting”

  1. Troy says:

    They were meeting about who gets Lehman’s lacrosse players.

  2. VennData says:

    This Sunday stuff means they can only bailout 52 firms a year; meaning, it’ll take about ten years to get the whole S&P500.

  3. “said the people, who asked not to be named because the auction is private”

  4. Rich Shinnick says:

    Hey, why not just throw in another $30 billion backstop. What is another 30 billion or so added to the national debt? Has anyone checked the “National Debt Clock” lately?

    Barry, your share of the almost $10 trillion debt is $31,781.58, so is your wife’s and each of your kids. So, if you have a family of 4 (as I do), the federal government has borrowed $125,000 to support you…they could use the money right now..

    So, here is my appeal to all of my fellow Americans:

    Please send a check for $31,781.58 to the U.S. Treasury c/o Hank Paulson. It will help ease the burden of all these bailouts greatly.

    Barry, as soon as you send the check for your family, let me know and I will send the check for mine. Since it is your blog, I do expect you to lead by example.

    Oh, wait! Deficits don’t matter, I forgot.


  5. SINGER says:


  6. christofay says:

    “said the people, who asked not to be named as the auction is private” for the long term profitable part of the company. The loss holding parts of the company will be public, for us

  7. tom a taxpayer says:

    Capo di tutti capi Hank “the mole” Paulson ordered an emergency sit-down with the bosses of the Wall Street families to stem trouble at the weak family Lehman. The boss of all bosses is mad that two of his family, Bears Stearns and Lehman, have lost some much money and made him look so weak. Godfather Hank has shown tolerance with the first weak family, Bear Stearns. But after issuing strict orders to shape up, he is losing patience with the Lehman family. Rival domestic mobs like Bank of America and foreign mobs like Barclay’s and China Fortune Cookie Factory have made moves on the weak Lehman family.

    The sit-down at an undisclosed all-nite pizzeria and Chinese laundry included Morgan Stanley Chief Executive John Mack,Merrill Lynch Chief Executive John Thain, J.P. Morgan Chase CEO Jamie Dimon, Goldman Sachs Group CEO Lloyd Blankfein, Citigroup Inc. head Vikram Pandit and representatives from the Royal bank of Scotland Group PLC and Bank of New York Mellon Corp., among others. All men of respect.

    Hank “the mole” ordered a cold scungilli salad as a mandatory appetizer for everyone as a test of bone fides. A couple of weak men who did not have the stomach for cold scungilli ran from the room, as Hank yelled, “Good riddance, you don’t have the stomach for Wall Street.” The Lehman family, trying to get back in Hank’s good graces, ordered second helpings of cold scungilli salad.


  8. There should be no more bailouts that’s not a proposal it’s a statement – it’s like $4 gasoline – we have reached a limit. The future will be negotiated like Lehman – I wish I could be present to listen to this meeting – come on..
    has to be great – Wall Street is running out of Oxygen – These guys are doing what they should have done with Bear Sterns, Fannie and freddie – we’ll have no more of that!!! Who is the we – the people! Remember, “we the people, in order to form a more perfect union….LaDeDa, insure domestic tranquility -

    We need a good Depression (ok, Depression-lite) and a good cleaning and taking out the garbage – point fingers and take minor offenders out of jail and fill their places with about 5,000 people who need some “time.” God, I need another drink!

    PS> If they really do get Lehman divided out – without government assurance – the market will get new Oxygen – long Monday
    otherwise – watch out, take cover – FULL MOON MONDAY SEPTEMBER 15TH (just happens to be)

  9. dblwyo says:

    Last fall we had a speaker at a PE association meeting who’d known several of the LTCM salvage team who told him that it wasn’t multiple ’00s of $Bs at risk but $T’s !
    This is the continued working out of risk re-pricing, de-leveraging and the discovery of how badly the FinInd business models are broken IMHO. Fortunately the new intervention facilities likely mean we can keep the wheels turning and on but that means another 18 months of this “death of Western Civilization” events.
    We shouldn’t under-estimate either now serious this is nor what’s at stake. My take on the markets and the consequences:

  10. cloudy says:

    well, if Palin can sell a plane on Ebay, why can’t Fuld list Lehman on Ebay? They take paypal.

  11. schaz says:

    Is Lehman gone?

  12. leftback says:

    A few late night thoughts:

    LEH isn’t anything like LTCM. Not enough counter-party risk. AIG is a different story, you are getting into the whole CDS nightmare there.

    Anyone agree we are starting to see “demand destruction” for investment banks as the price gets really really high? The guys who wrote 6-9 months ago about the capital window eventually closing were spot on.

    Rich Shinnick said: “your share of the almost $10 trillion (US) debt is $31,781.58″,

    ..and so is mine. The good news is that we have it and we can lay our hands on it now. Here is the bad news, Rich: everyone else has been pissing their money away on houses and SUVs so we are going to have to pay their share as well.

    schaz: LEH has been gone for a while. Dead Bank Walking.

  13. CNBC Sucks says:

    Did you guys and gals know there are places where people think CNBC is too pessimistic and too aggressive in its reporting of negative company news?

    Boggles the mind…

  14. Richard Kline says:

    Total low ball bids for Neuberger Berman et. al.—but that’s what Fuld gets by waiting until he has to sell under duress. His ego gets him $.50 on the $1. But everybody at those units should be glad ’cause somebody wants them in their jobs. Not so those outside watching the drawbridge go up and the zombies close in . . . .

  15. Chief Tomahawk says:

    Anyone know whether Dr. Henry Frankenstein was in attendance?

  16. s0mebody says:

    “In attendance were New York Fed President Timothy Geithner, Treasury Secretary Henry Paulson, Securities and Exchange Commission Chairman Christopher Cox, Morgan Stanley Chief Executive John Mack and Merrill Lynch Chief Executive John Thain, among others.”

    I’m exuding confidence.

  17. leftback says:

    CNBC sucks:

    Your use of the word “think” in relation to posters on the Yahoo finance message board was clearly inappropriate… every now and then I look at MW as well and it is fairly depressing stuff – largely illiterate for a start. We are lucky to have TBP, CR, NC, Mish etc. for information and discussion.

    You’re right – it is shocking, everyone out there is “buying and holding” and intoning the “market always comes back” mantra like crazy. Insane. The brainwashing has been really extensive – “bensteinery” , as BR puts it, has been pervasive. Talk about an upcoming market crash and people will immediately call the health department and have you hauled off.

    AIG, more than WaMu, and much more than Lehman is key to the great unravelling, I believe, because of its position in the web of CDS. The Feds have been thinking about this since that “orderly unwinding” press release a while back.

    I can’t help wondering if “they” might just suspend the CDS market and say all bets are off. There would be a sell-off but at least the spectre of a trillion $ uncertainty would be removed. Of course the legality of such a move would keep lawyers busy for ever. Crazier things have happened…

    Quite soon now, the corporate bond market is going to blow sky high, spreads are going to go through the roof. Yields were in the 15-20% range in the 1930s. There is so little money to lend that rates will be astronomical for poor credits.

  18. Chief Tomahawk says:

    “In attendance were New York Fed President Timothy Geithner, Treasury Secretary Henry Paulson, Securities and Exchange Commission Chairman Christopher Cox, Morgan Stanley Chief Executive John Mack and Merrill Lynch Chief Executive John Thain, among others.”

    A ha! “Among others” = Dr. Frankenstein, undoubtedly brought in to assemble the parts into …

  19. BG says:

    SINGER asks,


    This is defacto evidence of heavy-handed government intervention. Yes, you could use the word – manipulation.

    The more you peal this onion, the more you realize there is nothing free-market about it. What I want to know is when did this change occur. I don’t remember a huge one-day plunge (percentage-wise) since ’87. Maybe that is when it happened; but, it is obvious at this juncture that something definitely has changed in market movements since that time. We don’t even need circuit-breakers anymore. Remember those things. Please tell me how in the hell you can get thru this period without triggering any circuit-breakers? There is no way!

    I am totally amazed the market is still at these levels. We are facing financial armagedon and the market still finishes the day unchanged. There is no way that can happen day in and day out without being managed. Sometimes, it is within a few points of breaking even. How convenient!! You can’t tell me that is a fluke!

  20. SINGER says:



  21. BG,

    you’re getting closer. this rigged wheel will keep spinning until this:

    “I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around [the banks] will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs. (Thomas Jefferson, Letter to the Secretary of the Treasury Albert Gallatin) (1802) …..

    becomes an obvious Truth.

    Enlighten the people, generally, and tyranny and oppressions of body and mind will vanish like spirits at the dawn of day.
    Thomas Jefferson

    Every citizen should be a soldier. This was the case with the Greeks and Romans, and must be that of every free state.
    Thomas Jefferson

    Honesty is the first chapter of the book of wisdom.
    Thomas Jefferson

    Shake off all the fears of servile prejudices, under which weak minds are servilely crouched. Fix reason firmly in her seat, and call on her tribunal for every fact, every opinion. Question with boldness even the existence of a God; because, if there be one, he must more approve of the homage of reason than that of blindfolded fear.
    Thomas Jefferson

    We in America do not have government by the majority. We have government by the majority who participate.
    Thomas Jefferson

    I would rather be exposed to the inconveniences attending too much liberty than to those attending too small a degree of it.
    Thomas Jefferson, to Archibald Stuart, 1791

    Foolish Founders, what did they know, Right?

    They highlighted the Path, which trod, would have allowed us to keep the Republic.

    Lucky for us, it also works as a Path to Restore the Republic.

    We need no new Political GeeGaws, or Gimcracks, only sense, enough, to pick, as They did, the Right parts of the Past upon which to Build.

    The Anti-Federalists, the real Republicans, understood, all too well, the dagers inherent in concentrated Powers. They predicted the path, and its Travails, that we are now on, from 220+ years ago.

    Human Nature, no Freud needed, was well understood by any, with eyes to see, as long as we’ve had Vision.

  22. andrzej says:

    why we haven’t had a one day sell off like 1987. Program trading in its infancy. Wall Street always loves to get its hands on new toys and herald how they will change the world of finance. Same goes here. Wall Street traded the best performing of these programs, eventually everyone was using near similar ones. When the Sell programs all triggered at the same time, it was just rampant steady selling all day. The infrastructure was not build for the flood of client calls.

    These days you get multi month selling that does not jostle the herd. They talk about being gentle with cattle when walking them up int the slaughter house. Too much adrenaline is bad for the meat. IF you don’t spook them they will go where you want them to go

  23. Posted by: andrzej | Sep 13, 2008 7:45:18 PM

    no kidding.

    it’s the MutFund/Index/401k fueled Font of the Perpetual Bid. “Investors”, literally, sowing the seeds of their own destruction.

    Wow, and we think Micheal Myers is “Dr. Evil”, talk about getting shagged.