Word: lehman
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...great banking crisis of 2008 is over. It began last September 15 when Lehman Brothers filed for bankruptcy and bottomed when Citigroup (C) traded below $1 last month. Most analysts believe that mortgage-backed securities which included packages of subprime home loans failed when mortgage default rates went up and housing prices raced down. That is only partially true. Banks made a tremendous series of ill-advised loans to private equity firms, hedge funds, commercial real estate holders, and the average man with a credit card balance which he cannot pay. (See pictures of the top 10 scared traders...
...more than two-thirds of the deals, German cities insured their assets with AIG or Lehman Brothers. So after those two pillars of U.S. finance crumbled, German cities suddenly faced the risk of having to make huge payments - taken together, as much as €30 billion ($40 billion), according to some estimates - to their American investors. (Read "Why Berlin Says U.S. 'Bad Bank' Plan...
...owned bank in Germany, the Landesbank Baden-Wuerttemberg. But city officials say BVG's advisor, J.P. Morgan, suggested the transit company spread the risk by insuring the deal through a collateralized debt obligation, or CDO, backed by a consortium of some 150 banks and insurers that included AIG and Lehman Brothers...
With the collapse of Lehman Brothers and the uncertain future of AIG, BVG fears that the U.S. investors could demand as much as $200 million in additional collateral. As a precaution, the transit company has taken a risk provision of €157 million ($208 million) on its balance sheet. BVG says that when the deal was done, J.P. Morgan assured that it would not be liable unless the majority of its CDO backers became insolvent. "But they misled us," says Reetz. "It now appears that we could be made liable even if just one of the backers becomes insolvent...
...limbs and he'll keep on coming atcha. And he's humble. You won't find zombies swanning around and putting on airs like some other monsters I could mention. They're monsters of the people. It was the beginning of the end for vampires when Lehman Brothers went under, those bloodsucking parasites. Down with vampires. Long live (or is it die?) the zombie: the official monster of the recession...