As World Waits For Senate Vote, Lehman Leaps Back Atop Headl
Turning the page, Lehman Brothers and its Chapter 11 fiasco are back in the news today, on a few fronts: 1) There are so many resumes emblazoned with the words LEHMAN BROTHERS finding their way directly to the HR folks at banks still in the business that these banks are refusing to pay headhunters for sending them any Lehman-experienced folks their way. 2) It appears that the 750 Lehman employees in the U.K. who became the latest victims of the credit crisis job axe should not plan any in-between-job vacations just yet since their severance packages do not look too plentiful—and their bonuses could be nil. 3) Speaking of nil, hedge funds that used Lehman’s U.K. prime brokerage unit are in some deep shinola. Lehman’s bankruptcy meant assets immediately were frozen in its prime brokerage operation—which clears trades, provides loans and offers other admin services for hedge funds. In turn, this meant any hedge fund relying on the unit could more or less kiss its cash that the unit held goodbye. In some cases, smaller hedge funds relied almost exclusiviely on Lehman’s prime brokerage unit, resulting in their own liquidation.
In sort-of-related-to-Lehman Brothers news, the financial crisis is slowing down construction in New York City and it could bring to a halt the building of Brooklyn’s Atlantic Yards project, whose centerpiece is supposed to be the Barclays Center, the new home of the National Basketball Association’s New Jersey Nets. The British bank that acquired Lehman's U.S. banking operations paid about $400 million to have its name on the arena for 20 years in the largest naming-rights deal in NBA history.
The Senate is set to vote on the latest incarnation of the federal bailout package tonight at 9:30 p.m. EST. The plan still calls for the Feds buying up bad mortgages to the tune of $700 billion, and has a few new bells and whistles that it didn’t have when the House sacked it on Monday. New provisions include increased federal deposit insurance (from $100,000 to 250,000) and two more years of tax breaks, estimated to put $149 billion back in corporations and people's pockets over the next 10 years. The new deal has been backed by both presidential candidates, and is expected to pass. Though, that’s what they said on Monday. So it could be a fingertip biter.