A Few Weekend Developments
posted on
Oct 05, 2008 08:01AM
Golden Minerals is a junior silver producer with a strong growth profile, listed on both the NYSE Amex and TSX.
The banking crisis has now spread to Italy where their largest bank will be holding an emergency meeting today.
Below that is a funny tidbit from France where Sarkozy has decided to intervene in the real estate market by buying up 30,000 homes in his home country. Perhaps he will soon decide to buy Renault/Peugeot vehicles to support sagging sales. What a joke!
Lastly, the grumblings are getting louder that JPMorgan purposely caused Lehman Bros. to collapse to help offset some of their massive derivative losses.
Should be an interesting week - VHF
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UniCredit Directors to Meet on Capital Increase
By Steve Scherer and Lorenzo Totaro
Oct. 4 (Bloomberg) -- UniCredit SpA, Italy's biggest lender, will hold an extraordinary board meeting tomorrow to discuss a plan to boost its regulatory capital and settle investors' concern with its finances.
The Milan-based bank is considering paying its dividend in shares to hold on to about 3 billion euros ($4.1 billion) in cash and bolster its Core Tier 1 capital ratio, Il Sole-24 Ore and Ansa newswire reported today without citing anyone. Francesca Palermo, an UniCredit spokeswoman, declined to comment on the plan. The meeting will be in the afternoon, Ansa said.
UniCredit shares plummeted 24 percent during the first three days of last week. The stock then recovered some of the losses after Italy's stock-market regulator on Oct. 1 banned short sales of banking and insurance stocks, and Prime Minister Silvio Berlusconi said he ``won't permit speculative attacks'' on banks.
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France To Buy 30,000 Planned Homes To Boost Building Business
10-1-08 2:50 PM EDT
PARIS (AFP)--President Nicolas Sarkozy, grappling with the global financial crisis, has decided to directly support the French construction industry by buying 30,000 homes waiting to be built, the presidential palace said Wednesday.
"So that current property programs can be successfully concluded, the president...has decided to intervene directly, ordering the purchase at discounted prices of houses on which building work has not yet begun," a statement said.
This move will initially cover 30,000 homes, and by ensuring that they will be built, the decision will support the homebuilding industry, it said.
The decision was taken at a meeting on the financial crisis attended by Prime Minister Francois Fillon and the economy, budget and housing ministers.
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JPMorgan Withheld $17 Billion From Lehman, Triggering Collapse
Sunday, October 5, 2008
Yves Smith
JP Morgan has been accused by its Wall Street rivals of dealing the final hammer blow that forced Lehman Brothers into collapse in a sensational claim that threatens to spark a colossal legal battle.
The giant American bank is alleged to have frozen $17 billion (£9.6 billion) of cash and securities belonging to Lehman on the Friday night before its failure.
According to Lehman’s biggest creditors, this was what precipitated the liquidity crisis that embroiled the firm, forcing it into Chapter 11 bankruptcy protection on the morning of Monday, September 15....
The funding lines provided to Lehman to finance its everyday operations amount to $188 billion, according to court filings.
The creditors are now demanding that JP Morgan open up its books to the bankruptcy court to allow the transactions to be assessed.
“The creditors’ committee understands that LBHI [Lehman Brothers Holding Inc] had at least $17 billion in excess assets which were held at JPMC [JP Morgan Chase] on the Friday going into the weekend before its bankruptcy filing,” the documents said.
“The creditors’ committee further understands that, on September 12, 2008, JPMC refused to allow LBHI access to its excess assets and instead ‘froze’ LBHI’s account. In freezing LBHI’s assets, JPMC was purportedly holding all of LBHI’s assets as a potential offset against any claims JPMC may have had against LBHI.”
JPMorgan, the biggest U.S. bank by deposits, financed Lehman's brokerage operations with daily advances, while money market funds and other short-term lenders provided overnight loans, according to bankruptcy court documents. When JPMorgan shut Lehman off from funds, Lehman ``suffered an immediate liquidity crisis that could have been averted by any number of events, none of which transpired,'' according to the filing....
Lehman seemed to have enough liquidity to meet its obligations on Sept. 12, the Friday before its bankruptcy filing, creditors said, referring to the cash and collateral at JPMorgan. In addition, the bank held ``highly liquid'' securities bought with secured financing amounting to $188 billion from banks and other lenders, they said.
The ``freezing'' of Lehman's account meant it no longer had funds to support its operations, they said.
Explaining Lehman's collapse to the judge after the bankruptcy filing, company executives and lawyers said the $188 billion pool of loans mostly financed the bank's least liquid assets, subprime mortgages and structured financial instruments.
``Secured financing fell out of reach'' because of the devaluation of assets securing the loans, forcing Lehman to deplete its cash to continue trading, said lawyer Shai Waisman of Weil Gotshal & Manges in a Sept. 16 court hearing. ``This began the stranglehold on Lehman,'' Waisman said.
JPMorgan is Lehman's largest secured creditor, with an estimated claim of $23 billion, according to a Sept. 25 court filing. Unsecured creditors have claims on Lehman that might be worth 15 cents on the dollar or less, according to analysts including Peter Plaut of Imperial Capital LLC.
After Lehman's filing, JPMorgan advanced the company $87 billion on Sept.15 and $51 billion the next day to pay short- term lenders and settle trades, according to court documents.
Lehman Brothers Holdings Inc., the securities firm that filed the biggest bankruptcy in history yesterday, was advanced $138 billion this week by JPMorgan Chase & Co. to settle Lehman trades and keep financial markets stable, according to a court filing.
One advance of $87 billion was made on Sept. 15 after the pre-dawn filing, and another of $51 billion was made the following day, according to a bankruptcy court documents posted today. Both were made to settle securities transactions with customers of Lehman and its clearance parties, the filings said.
The advances were necessary ``to avoid a disruption of the financial markets,'' Lehman said in the filing.
The first advance was repaid by the Federal Reserve Bank of New York, Lehman said. The bank didn't say if the second amount was repaid. Both advances were ``guaranteed by Lehman'' through collateral of the firm's holding company, the filing said. The advances were made at the request of Lehman and the Federal Reserve, according to the filing.