Friday, April 11, 2008

Lehman Opened Fed Spigot

Financial engineering helped get Wall Street into its current credit-market problems. Now, Lehman Brothers Holdings Inc. using a little engineering -- and some help from the U.S. Federal Reserve -- to bolster its finances. In recent weeks, Lehman moved $2.8 billion in loans, including some risky leveraged-buyout debt that has been difficult to sell, into a newly created investment vehicle it named "Freedom," which in turn issued debt securities backed by the loans. About $2.26 billion of the securities received investment-grade credit ratings from Moody's Investors Service and Standard & Poor's. Lehman then pledged some of the ...

Even beyond the credit crisis, the much-heralded Treasury secretary has failed to accomplish most of his own agenda. 5/12/08 Update from The Problem with Paulson

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