This morning's CNBC is reporting that Barclays is the leading contender to buy Lehman. Apparently, Lehman would sell its good assets to Barclays, and then a consortium of banks would put up $30B to buy the bad part of Lehman.
This deal sounds insane. Why would a bunch of competitive investment banks subsidize Barclays?
If the deal closes, it's not because the financials of the bad bank make it a great opportunity for profit. It's because the consortium have so much rot on their own books that a mark-to-market event would take them all down. So it might be worth billions for them to keep their banks open a while longer and collect their salaries and bonuses.
We'll know by 9am tomorrow.
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