This should be fun. I'll definitely be dialing in. The stock fall wasn't too bad today, considering . . . but one doesn't like to hear that Asian banks are telling their traders to stop doing business with them, even if that order was later rescinded. We'll see how Asia's feeling tomorrow.
The Fed will also be releasing the statement from its monthly meeting at 2 pm. Should be a wild day in the markets.
Doesn't Lehman have pretty significant cash reserves, though? Probably not enough to stay afloat on their own, but I don't think they're in quite as dire a situation as Bear.
I vote for a 3% rate cut.
Let's take the rate to -1% (you pay to keep your money in the bank) and see the economy boom.
"Margin" call?
I'm betting that after the Fed cuts the rate by a good 100 basis points, we will see an instant rise in stocks, and then, same or next day, a continued drop. And little action before the announcement.
I don't think Lehman has the same issues as Bear. Not to mention, Bear generated tons of badwill over the yeas when 1) they didn't help Wall Street in the bailout of Long Term Capital Management and 2) didn't bail out their own hedges funds last August.
Like Drexel Burnham, probably too many other parties didn't mind seeing the firm in the panic zone.
I am betting that we will see some criminal prosecutions to the extent that officials at the firms are giving one impression of solvency, when the reality is something else.
Lehman had almost $100 Billion in unpledged liquidity on their last statement, five times as much as Bear. Furthermore, the Fed has now shown it will lend against anything (viz - the $30 million none-recourse financing of garbage-to-be-designated in the JPM acquisition of Bear).
Perception is reality with dealers - they are highly leveraged and require confidence to survive. But Lehman and the Fed have enough resources to put up a battle royal in a run.
Lehman is indeed jumping on anyone who shows signs of cutting lines. Try putting a few Lehman bonds out to bid and watch your phone light up.
In many ways Lehman is in better shape than other firms. In this environment it hardly matters.