Revisiting Future Path

Chapter 216

Lehman Brothers is also actively saving itself.

During the negotiations between Fuld and the Korea Development Bank, he tried to split a portfolio of commercial real estate worth 30 billion U.S. dollars to shareholders to form an independent listed company; the remaining real estate assets were sold or written down, that is, using the concept of limited liability to get rid of all bad Asset burden. However, these non-performing assets involve countless bank capital in all aspects. How could Wall Street allow Lehman Brothers to escape from the shell and ascend to heaven? Lehman Brothers’ selfishness has offended many potential partners.

On September 10, 2008, Lehman Brothers held an investor conference call and announced a net loss of US$3.9 billion in the third fiscal quarter. Lehman Brothers management did not mention financing matters, but hoped to raise funds through the sale of existing assets. Standard & Poor's immediately warned Lehman Brothers that out of concerns about its financing ability, it considered lowering its credit rating.

However, so far public opinion is still optimistic about Lehman Brothers. Financial commentators actively advise Lehman Brothers, believing that Lehman Brothers can use the Fed's new credit measures to raise funds, and can also exchange illiquid assets for safer securities such as treasury bonds.

On September 11, 2008, when the request for additional collateral of US$5 billion a week ago was pending, JPMorgan Chase again asked Lehman Brothers to provide additional collateral of US$5 billion. JPMorgan's attitude is very tough and there is no room for reversal.

On September 12, 2008, the credit rating company warned Lehman Brothers that if no new funds are raised within 48 hours, they will downgrade Lehman Brothers' debt rating on Monday. This means that Lehman Brothers needs to pay more collateral to JPMorgan Chase and others. Inside and outside of Lehman Brothers, panic intensified rapidly, and countless customers flocked to ask for withdrawal, which caused Lehman Brothers' cash management system to instantly collapse and paralyze.

The Federal Reserve Bank of New York arranged urgent negotiations to invite Wall Street elites to advise Lehman Brothers; the Federal Reserve also ordered Goldman Sachs and many other companies to jointly evaluate Lehman Brothers’ fixed assets and proposed whether to acquire Lehman Brothers through billions of dollars in each company’s investment Commercial real estate. However, after reading the accounts of Lehman Brothers, Wall Street elites have expressed their doubts: Now that real estate loan securities have plunged, how can Lehman Brothers continue to overestimate the loan securities it holds by 97.9%? Lehman Brothers' self-estimated commercial real estate of US$30 billion is worth only US$20 billion at most. If the discount reaches 20 billion U.S. dollars, companies may still have some interest; as for 30 billion U.S. dollars, how far is Lehman Brothers going.

On September 14, British Barclays Bank and Bank of America stated that they would refuse to buy Lehman Brothers unless they officially agreed to provide the amount required for the transaction. And Treasury Secretary Paulson made it clear on September 12 that the government will not provide assistance, and taxpayers cannot use their money to provide loans to an investment bank that is disintegrating. Facing Paulson’s righteous refusal, British Barclays Bank shrank, and Bank of America turned around to buy Merrill Lynch, which was in a better financial position.

The only buyer of Lehman Brothers is the Rose Fund.

At the same time, bad news came from AIG: AIG can't hold on. Compared with Lehman Brothers, AIG is a behemoth too big to fail. Take Goldman Sachs as an example. It holds at least $22 billion in AIG credit default swap products. The amount is so huge that Goldman Sachs is worried that AIG will go bankrupt. If AIG falls, Goldman Sachs will immediately have $22 billion in bad debts, which is more serious in nature than Lehman Brothers.

Related parties similar to Goldman Sachs are numerous.

In front of AIG, the bankruptcy of Lehman Brothers is nothing at all.

The Federal Reserve urgently unites with the top ten banks of Bank of America, Barclays, Citi, Credit Suisse, Deutsche Bank, Goldman Sachs, JPMorgan Chase, Merrill Lynch, Morgan Stanley, UBS and other top ten banks. Each bank invested US$7 billion to establish a balance of US$70 billion. Quasi-funds are used to provide financial protection for financial institutions that are at risk of bankruptcy.

The funds are guaranteed by AIG, not by Lehman Brothers.

The Fed has indeed abandoned Lehman Brothers.

Since world-renowned hedge funds all own the assets of Lehman Brothers and its subsidiaries, in order to avoid the financial system from being involved in the vortex caused by the bankruptcy of Lehman Brothers, the International Swap and Derivatives Association announced that it allows investors to write off the credit associated with Lehman Brothers. Derivatives. In the evening of September 14, the Federal Reserve Bank of New York officially notified Lehman Brothers that Lehman Brothers must either obtain circulating funds from Hua Guo Capital led by the Rose Fund before the opening time on Monday, or prepare bankruptcy application documents.

In just a few days, the Rose Fund became the only way for Lehman Brothers to survive.

Even though the Rose Fund is unreliable, Lehman Brothers can only desperately seize this lifeline.

At around 22:00 on September 14th, New York time, Fuld asked to go over Gong Qiuqiu to talk to the legendary man behind the scenes of the Rose Fund. Gong Qiuqiu's encrypted network video communicated with Wei Dongsheng and said depressed: "Lehman Brothers has no funds to maintain normal operations and will file for bankruptcy before the market opens on Monday."

Wei Dongsheng joked: "Yanjing is already Monday."

Aware of Wei Dongsheng’s optimism, Gong Qiuqiu flashed a thought in his mind: "Are you really going to acquire Lehman Brothers?"

Wei Dongsheng: "Why not?"

Gong Qiuqiu: "Lehman Brothers is a pit we fill in. Bank of America avoids it for fear."

Wei Dongsheng: "We are not Bank of America."

Gong Qiuqiu: "So, we fill the pit of Lehman Brothers even more."

Wei Dongsheng sighed: "Bear Stearns to Merrill Lynch bullied our weak position on Wall Street and kept asking for postponement of discount performance. Bear Stearns’ 1.5 billion US dollar contract was cut to 600 million US dollars, and Merrill Lynch’s 3 billion US dollar contract also Want to cut down to 300 million US dollars. Even if it is compromised and accepted, the short-selling profits will passively become the paper figures of the banks. Unflowable money is not money, instead of letting the greedy JP Morgan Chase, Bear Stearns, and the United States Banks, Merrill Lynch and other financial giants have soft knives to wipe away the profits that should belong to us. It is better to set off a storm on Wall Street through Lehman Brothers."

Gong Qiuqiu: “Cooperating with an investment bank to counter the greed of other investment banks is indeed enforceable. However, Lehman Brothers’ financial situation is too bad. It lacks US$5 billion in liquidity in the short term and US$30 billion in the long term. To protect funds, the loan bonds it holds are even gunpowder barrels. The bankruptcy documents prepared by Lehman Brothers are said to have exceeded 800 billion in total debt, which is the largest bankruptcy application in history.

Wei Dongsheng shook his head: "It's not that serious."

Gong Qiuqiu was surprised: "How to say?"

Wei Dongsheng: "The Fed will rescue the market."

Gong Qiuqiu: "Paulson has refused...No, you mean AIG."

Wei Dongsheng: "Yes, AIG is too big to fail. The problem with Lehman Brothers looks very serious at first glance. In fact, as long as it is delayed for a while until the Fed rescues AIG, all difficulties will disappear with the wind. We don't have to be demanding. Lehman Brothers brought out the whirlpool. As long as it can survive for a while, it will be safe and sound. Instead of realizing the gambling contract against Merrill Lynch and AIG at a discount, it is better to transfer to Lehman Brothers for renewal. As long as it is operated properly, there will be no roses. Substantial loss."

Gong Qiuqiu did not agree, nor expressed any opposition: "Let's talk to Fuld first."

Communication in the Internet age is relatively cheap, and Wei Dongsheng quickly established a video connection with Fuld, the helm of Lehman Brothers. Fuld’s cheek wrinkles are filled with anxiety, confirming that the opposite of the video is Wei Dongsheng, the helm behind the Rose Fund and the head of the Spring and Autumn Search. He does not waste time nagging emotional words, and cuts into the topic simply and rudely: "Lehman Brothers is short of bankruptcy. Twelve hours, tell me your minimum requirements, as long as there is a slight possibility, I will accept it."

Wei Dongsheng sat firmly on the Diaoyutai and unceremoniously accused Fuld: "From July 2007 until now, Lehman Brothers has been very blind and very clumsy in the face of the crisis. A few days ago I was still hesitating whether to support one of your executives to usurp Lehman. brothers."

Fuld did not refute angrily, but promised with a look of old skin: "If you offer the right price, I can withdraw for Lehman Brothers."

Wei Dongsheng did not negotiate a specific price with Fuld, and slowly told the story: "The dragon culture is prevalent in our country. Note that it is a long, not a dragon. What is a dragon? A dragon can be big and small, and can rise and hide; Spit out the fog, and the small is hidden. The so-called everyone is like a dragon, not everyone can be strong enough to spit out the fog, but everyone can do the great for the small, can sweep the world and sweep the room."

"With constant luck and limited capacity, there will always be losses and gains in business operations. As far as you are concerned, you can separate Lehman Brothers from the control of American Express. From the $75 million profit in 1994 to today, no one does Admire your abilities. But it’s easy to go down the wind and hard to go against the wind. The current crisis is the most challenging one. Before 2007, you performed what you can do; after 2007, you failed to perform what you can do. Small skills. Because I don’t think you can lead Lehman Brothers out of the quagmire."

Fuld did not refute, and calmly responded to Wei Dongsheng's questioning: "Who do you think can replace me?"

Wei Dongsheng shrugged: "This is the problem. I am not optimistic about your ability, but I can't think of anyone who can carry the burden of Lehman Brothers for you."

Fuld was a little confused.

Wei Dongsheng initially said in his tone that Fuld felt that Wei Dongsheng wanted to take the opportunity to force him to abdicate. Unexpectedly, Wei Dongsheng immediately said that he did not know who could replace him.

If it's not forcing the palace, why should Wei Dongsheng say these unpleasant things?

Fuld did not understand Wei Dongsheng's meaning, and simply retreated to continue to express his sincerity: "If you think anyone can lead Lehman Brothers out of the crisis, I can abdicate at any time."

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