US Treasury Secretary Henry Paulson and New York Federal Reserve Bank President Timothy Geithner urged the heads of Wall Street’s biggest firms to find a solution to the plight of Lehman Brothers Holdings Inc, signaling their reluctance to use government funds to bail out the investment bank, two people familiar with the talks said.
Chief executives who attended the meeting at the New York Fed late on Friday afternoon included Citigroup Inc’s Vikram Pandit, JPMorgan Chase & Co’s Jamie Dimon, Morgan Stanley’s John Mack, Goldman Sachs Group Inc’s Lloyd Blankfein, Merrill Lynch & Co’s John Thain and Bank of New York Mellon Corp’s Robert Kelly, the sources said, declining to be identified because the meeting wasn’t public. Christopher Cox, chairman of the US Securities and Exchange Commission, also participated.
Kendrick Wilson, a former Goldman Sachs executive whom Paulson tapped last month as an adviser, helped lead the discussions, which ended without a specific plan, one of the people said. Bank of America Corp CEO Kenneth Lewis did not attend because his firm is a potential bidder for Lehman, the person said.
Bank of America, the biggest US consumer bank, is among the firms weighing an acquisition of some or all of the 158-year-old investment bank after it reported its worst quarterly loss this week and the shares plummeted 77 percent in the past five days, said sources familiar with the situation who declined to be identified because the negotiations are confidential.
Spokesmen for the New York Fed and the SEC confirmed that the meeting took place with “senior representatives of major financial institutions” and declined to comment further.
The US Treasury is “in regular contact” with market participants, spokeswoman Jennifer Zuccarelli said earlier yesterday.
Paulson doesn’t want to put up money to help fund any Lehman acquisition, a source familiar with his thinking said yesterday. Unlike when the Fed committed US$29 billion to help JPMorgan Chase & Co take over Bear Stearns in March, Lehman now has access to a lending facility for brokers that would permit an orderly process for unwinding the firm, the person said.
At the meeting on Friday, Paulson indicated he wants to avoid putting taxpayer money behind New York-based Lehman the way the government stepped in to guarantee the debt and mortgage-backed securities of home-loan financing companies Fannie Mae and Freddie Mac, said the people, who declined to be identified because the meeting was private. The government also wants to avoid a collapse of Lehman, which might disrupt US financial markets.
The banks and brokers called into the meeting may be asked to contribute money to back Lehman long enough to unwind its trades, the people with knowledge of the discussion said. No agreement was reached and the discussion was preliminary, a source said.
Potential buyers demanded some sort of government protection in the Bear Stearns case because of the mortgage-related assets the firm owned, which had plummeted in value. Since the collapse of the subprime mortgage market last year, banks have reported more than US$510 billion in writedowns and credit losses on such assets.
Also See: NYSE: Wall Street keeps its feet in the face of turbulence and
Also See: AIG may sell assets after share plunge
ANNOUNCEMENT: People who do not comply with the ban after a spoken warning would be reported to the police, the airport company said on Friday Taoyuan International Airport Corp on Friday announced that riding on vehicles, including scooter-suitcases (also known as “scootcases”), bicycles, scooters and skateboards, is prohibited in the airport’s terminals. Those using such vehicles should manually pull them or place them on luggage trolleys, the company said in a Facebook post. The ban intends to maintain order and protect travelers’ safety, as the airport often sees large crowds of people, it said, adding that it has stepped up publicity for the regulation, and those who do not comply after a spoken warning would be reported to the police. The company yesterday said that
NEW YEAR’S ADDRESS: ‘No matter what threats and challenges Taiwan faces, democracy is the only path,’ William Lai said, urging progress ‘without looking back’ President William Lai (賴清德) yesterday urged parties across the political divide to democratically resolve conflicts that have plagued domestic politics within Taiwan’s constitutional system. In his first New Year’s Day address since becoming president on May 20 last year, Lai touched on several issues, including economic and security challenges, but a key emphasis was on the partisan wrangling that has characterized his first seven months in office. Taiwan has transformed from authoritarianism into today’s democracy and that democracy is the future, Lai said. “No matter what threats and challenges Taiwan faces, democracy is the only path for Taiwan,” he said. “The only choice
CORRUPTION: Twelve other people were convicted on charges related to giving illegal benefits, forgery and money laundering, with sentences ranging from one to five years The Yilan District Court yesterday found Yilan County Commissioner Lin Zi-miao (林姿妙) guilty of corruption, sentencing her to 12 years and six months in prison. The Yilan District Prosecutors’ Office in 2022 indicted 10 government officials and five private individuals, including Lin, her daughter and a landowner. Lin was accused of giving illegal favors estimated to be worth NT$2.4 million (US$73,213) in exchange for using a property to conduct activities linked to the 2020 Chinese Nationalist Party (KMT) presidential and legislative election campaigns. Those favors included exempting some property and construction firms from land taxes and building code contraventions that would have required
TECH CORRIDOR: Technology centers and science parks in the south would be linked, bolstering the AI, semiconductor, biotech, drone, space and smart agriculture industries The Executive Yuan yesterday approved a “Southern Silicon Valley” project to promote the development of an artificial intelligence (AI) and semiconductor industry in Chiayi County, Tainan, Pingtung County and Kaohsiung. The plan would build an integrated “S-shaped semiconductor industry corridor” that links technology centers and science parks in the south, Executive Yuan spokesperson Michelle Lee (李慧芝) said yesterday after a Cabinet meeting. The project would bolster the AI, semiconductor, biotech, drone, space and smart agriculture industries, she said. The proposed tech corridor would be supported by government efforts to furnish computing power, workforce, supply chains and policy measures that encourage application and integration
RSS