"You will be there to turn the lights off"
May 19, 2022 1:41 PM   Subscribe

The Long, Slow Death of Lehman Brothers. You would think that Lehman Brothers, the bankrupt firm that inaugurated the financial crisis of 2008 would be dead and buried by now. Not so. "About that same time, on the seventh floor[the day of the bankruptcy], there was a run on the on-site snack shop. Staffers were panic-buying fruit and chocolate bars, afraid that the payment cards they loaded with cash would become worthless. Some returned to their desk with arms full of bananas. It was a microcosm of what Lehman’s administrators would be doing for the next 14 years: answering questions from people who had claims on Lehman—not lunch cards, but bonds—and then deciding how many bananas they could give them.

"What made Lehman especially odd was its pile of good assets. It had plenty of terrible stuff but wasn’t alone in that. Almost every major investment bank at the time had a high-risk model such as Lehman’s. (And many survived only after a huge intervention by the government.) In the 2,000-page court-commissioned report on its demise, Examiner Anton Valukas pinned the failure not only on junky loans, but also on the loss of faith from Lehman’s business partners, including other lenders. The bank had relied too heavily on their confidence, like a poker pro getting staked by other gamblers. When it disappeared, it was all over for Lehman as a going enterprise. But that didn’t make all its assets worthless."

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"Two court cases, one in London and the other in New York, are probably the last substantial issues that need to be resolved. They could linger for several more years, depending on appeals. But before the last contract is signed and the last rented office key is turned in, somebody might want to foot the bill for a goodbye cake and prosecco for Rattigan and others in a loose network of lawyers, accountants, consultants, and money managers. They’ve performed one of the weirdest jobs in finance: laying Lehman Brothers, finally, to rest."

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"Other creditors may fare even better. One of the most stark examples is the so-called Ecaps trade. The Ecaps were notes Lehman issued that paid investors an attractive yield but came with a catch: They were very low down on what’s known in the bankruptcy trade as the “waterfall.” When a company can’t pay its bills, who gets what is determined by how high they’re positioned as money flows downward. Imagine a pyramid of Champagne glasses, with a waiter pouring from a bottle at the top. The senior creditors, who own the glasses at the peak, get their cash first, and then excess spills to glasses beneath them, layer by layer. If there’s a lot of cash gushing down, everyone gets some. But if it’s a trickle, holders of those Ecaps and other notes might get nothing....A UK Court of Appeal judge ruled that the Ecaps bucket deserved to go higher up the waterfall. In the years after Lehman’s collapse, some Ecaps notes were considered so valueless that they were given away, according to trading certificates seen by Bloomberg. Now it’s possible that if things go well for holders—and that’s a big if—the notes could be paid in full. For the few who bought early and sat tight, a free scrap of paper might yield millions of dollars."
posted by storybored (21 comments total) 11 users marked this as a favorite
 
You just gave me a heart attack I thought this was about Lehman's.
posted by Melismata at 1:53 PM on May 19 [4 favorites]


Some returned to their desk with arms full of bananas. It was a microcosm of what Lehman’s administrators would be doing for the next 14 years: answering questions from people who had claims on Lehman—not lunch cards, but bonds—and then deciding how many bananas they could give them.

I would play Banana Broker 2022
posted by Going To Maine at 1:59 PM on May 19 [10 favorites]


A cursory reading of the headline had me genuinely panicking that my favorite Amish hardware store was about to be defunct, then I realized, no, just another one of a long line of hyper-capitalism's death throws. Whether or not these Wall street firms are going to take down the rest of civilization with them is the question of our age.
posted by seasparrow at 2:06 PM on May 19 [2 favorites]


Oh man, memories of people vainly trying to use up Borders gift cards as it was closing down...

My ex once temped in a situation like this, in a lone cube among a sea of empty cubes in a mostly abandoned office, scanning and shredding and hardly talking to anyone for a whole year.
posted by emjaybee at 2:21 PM on May 19 [8 favorites]


Damn, work for a billion dollar brokerage firm and you don't even get free snacks?
posted by octothorpe at 2:24 PM on May 19 [9 favorites]


In case Lehman Bros. has turned off your access to the Bloomberg, here's an archived version
posted by chavenet at 2:38 PM on May 19 [3 favorites]


The bankruptcy judge who oversaw the case now works for a company nicknamed MoFo. Can't make this up.
posted by Halloween Jack at 2:43 PM on May 19


Is Lehman like Enron? I read after Enron's breakup Enron didn't go away, people don't suddenly stop needing energy and if you totaled all the companies that were were spin-offs of Enron it would be the largest company in the world now. My experience working with large companies tells me they never really die and maybe a few at the top get in trouble, and the entry level types get hurt but the majority fare for the better.
posted by geoff. at 2:46 PM on May 19 [1 favorite]


14 years. Yeah that’s just getting started compared to the 21 years it took for the BCCI liquidation. I knew people in their 40’s who had only ever worked professionally on just that one liquidation…. nothing else.
posted by inflatablekiwi at 3:10 PM on May 19 [8 favorites]


"My experience working with large companies tells me they never really die"

The East India Company took 273 years to die, so there's still time.
posted by MrJM at 3:10 PM on May 19 [2 favorites]


Lehman was a mezzanine lender on one of my company's condo projects. We sold out the project in 2011, but still own a little commercial unit. Apparently, we can never sell or lease the unit because Lehman is still a lienholder, there is no one left to pay or clear the lien, and we will never get clear title. So we will fix the broken windows, pay association dues and taxes on an empty space forever. It's for better brains than mine to figure out.
posted by rekrap at 3:15 PM on May 19 [22 favorites]


For a dark comedy take on the fall of "Leighman Brothers," I'd recommend Don Cheadles' TV series, Black Monday. (The show was canceled earlier this year after the third season. Its art was struggling to imitate the insanity of real life.)
posted by fuse theorem at 4:04 PM on May 19 [1 favorite]


Lehman was a mezzanine lender on one of my company's condo projects. We sold out the project in 2011, but still own a little commercial unit. Apparently, we can never sell or lease the unit because Lehman is still a lienholder, there is no one left to pay or clear the lien, and we will never get clear title. So we will fix the broken windows, pay association dues and taxes on an empty space forever. It's for better brains than mine to figure out.

Art project
posted by Going To Maine at 4:27 PM on May 19 [6 favorites]


Super duper recommend Black Monday. I'd have added it to Fanfare but I really liked it & didn't want to hear people complaining about it. It's very funny & sharp & has a great cast.
posted by bleep at 4:29 PM on May 19 [3 favorites]


So we will fix the broken windows, pay association dues and taxes on an empty space forever. It's for better brains than mine to figure out.

What if you just moved into the place and squatted there until it became yours?
posted by any portmanteau in a storm at 4:38 PM on May 19 [4 favorites]


What if you just moved into the place and squatted there until it became yours?

They say that if you put a towel over each window and look at the condo from the outside there's one window that's not covered and that an analyst with a degree in finance from SUNY is in there, still going over spreadsheets in Excel 2003 and if you're real quiet at night you can hear the faint lyrics to Britney Spear's Womanizer... "I'm a... I'm a... womanizer... womanizer..."
posted by geoff. at 4:49 PM on May 19 [10 favorites]


For the few who bought early and sat tight, a free scrap of paper might yield millions of dollars.

And this shit is why people get into ponzi schemes, fall for scams, "invest" in crypto, play the lottery, participate in capitalism even though it is rigged, rigged, rigged. Some little scrap of paper... maybe you even have one right now... a golden ticket.....
posted by amanda at 4:58 PM on May 19 [1 favorite]


Oh man, memories of people vainly trying to use up Borders gift cards as it was closing down...

I remember during the dotcom bubble I got a fifty dollar gift certificate to some online bookstore, but I had recently bought a bunch of books and was going to wait till I finished those and buy whatever batch I wanted next. Months went by and the company got bought out -- but it was okay, the new owners were still going to honor it and everything else, so I still didn't rush to buy anything. Nearing my next birthday, I remembered the gift card and was wanting some books so figured just buy em myself finally... but the other company had been bought out, I think maybe even by Amazon but whoever it was were not going to honor the certificate from the first company.
posted by GoblinHoney at 6:07 PM on May 19



Art project


Yup. How can I donate space?
posted by lalochezia at 8:35 PM on May 19 [1 favorite]


I'd have added it to Fanfare but I really liked it & didn't want to hear people complaining about it.

file under Poignant Footnotes to MeFi

I know the feeling, I don't mind hearing about what people liked/did not super like about something, but sometimes you see people sharing something they really enjoy and there's some bugger who just has to chime in with why it's bad, hateful, or just generally shitty. It's okay to pass in silence, as my silent farting dog once said (frequently demonstrated, to be precise)
posted by elkevelvet at 9:06 PM on May 19 [4 favorites]


Everybody knows there's always money in the banana stand.
posted by yellowcandy at 10:16 AM on May 20


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