Collapse of Lehmanns

[TopGun]

Anyone directly affected by this already?

 

I should think we will all get sucked in one way or another with Lehmans owing £300bn to other banks and investors who will now also feel the pinch.

Edited 16 September, 2008 by TopGun

[Hatch]

Anyone directly affected by this already?

 

I should think we will all get sucked in one way or another with Lehmanns owing £300bn to other banks and investors who will now also feel the pinch.

 

I know a few people who work(ed) there.

 

They are all dicks and up themselves.

[Scudamore]

http://www.fool.co.uk/news/investing/2008/09/15/lehman-collapse-was-right-move.aspx?source=uemfoleml0010038

[Guest Dark Sotonic Mills]

I worked at a fair number of Merchant Banks, currency dealers and brokerages when I was at Uni and, without exception, I wanted to put every single one of the parasites there up against the wall and shoot them.

[dubai_phil]

Unfortunately the muppets who've been rubbing their bonus money in our faces for the past 10 years or so have SO totally fooked up the entire system that most of us will feel the effects in one way or another.

 

From my industry, many people in IT companies in Europe can't sell anything because the companies that buy new stuff can't raise a capital budget for investment as nobody wants to burn up any spare cash they have and are all (like SLH) being "asked" to reduce their borrowings. Their salaries are all 60:40 fixed to bonus and most are looking at a BIg reduction of their bonus cheques and no "new jobs" to move away into. This just filters all the way through, less to spend on leisure, home improvements etc etc etc.

 

A long way left to fall yet and those arrogant assh*les in the brokerages who are now being dumped on their asses would be a source of great lolage if they were not taking so many innocents with them.

 

Hang the lot of them I say....

[TopGun]

I have to say I have little sympathy for them either but it will affect a lot more than just them.

[swannymere]

The Stupid thing is the people running these companies now did'nt learn a ****ing thing from what happened at the end of the eighties, did exactly the same because they knew there would be a few years of fat bonuses before they got found out again. No doubt rather than festering in prison like some of the upper-management should, they'll all be making the same 'mistakes' in 10-15 years time. C***S :mad:

[Mao Cap]

The main part of my job is doing summaries of newspaper reports mentioning them and the subprime mortgage crisis (being doing it for two years, months before the financial crisis kicked off, so they obviously knew very well what was going on). Needless to say the last week has been hell, but now they're bust I'm not sure what I'll do all night!

[Torres]

Thing to remember is that there are a hell of a lot of admin and support staff who have been ****ed over by this too - not everyone was was an overpaid tosspot.

[Scudamore]

Thing to remember is that there are a hell of a lot of admin and support staff who have been ****ed over by this too - not everyone was was an overpaid tosspot.

 

Thing to remember is that even the admin and support staff are paid well over the odds as well...

[Hatch]

Thing to remember is that even the admin and support staff are paid well over the odds as well...

 

having done that I can vouch for the fact that they aren't

[South City Si]

having done that I can vouch for the fact that they aren't

 

Comapared to Local gov't/NHS, charities, etc they certainly are! I probably get paid at least 2k a year less than I could in private sector but the way they have acted and they I would get treated is exactley why I don't!

[mdearlove]

Thing to remember is that there are a hell of a lot of admin and support staff who have been ****ed over by this too - not everyone was was an overpaid tosspot.

Agree with this - I know 2 people who are now likely to be in the **** financially and neither are bankers. Both are systems people

[Scudamore]

having done that I can vouch for the fact that they aren't

 

Well maybe it's just the London wages...but several people i know (I live in Bournemouth - a town dominated by JP Morgan) have gone up to London to work for JP or another bank and made serious increases in their salary...granted cost of living is more...but they're hardly paupers...

[bridge too far]

The thing that really ******es me off about all this is that the people who really do earn top dollar do so in the form of bonuses and perks which they manage not to pay tax on (hedge funds for example).

 

So not only does an industry that, in the past, has baulked against regulation from governments now come cap in hand for governmental support but the people driving the requests for support pay very little tax to said governments in the first place!

 

Sod the man in the street, eh

[mdearlove]

and they don't lose anything for ****ing up the rest of the world! Still have their bonuses from good years.

Don't think our government will be able to bail out anyone now - already spent too much on the Northern Rock - they were lucky they were the first to go. Several other institutuions are really struggling. Some small building societies have been forced to join up with Alliance and Leicester to prevent them collapsing. A&L themselves are struggling and so have just agreed a takeover by Santander(Abbey). HBOS and Lloyds/TSB are looking to merge as HBOS are overexposed...nigthmare

[stevegrant]

HBOS and Lloyds/TSB are looking to merge as HBOS are overexposed...nigthmare

It's also quite opportunistic by LTSB. They're in a pretty strong position at the moment, particularly with HBOS' problems and the relatively low exposure they had to the US sub-prime market investments.

 

Could be a good time to buy HBOS shares right now - they won't go much lower than they are now while the merger talks continue, and if it goes through, they'll probably at a reasonable price then.

[mdearlove]

And yesterday would have been a good day to but LTSB - up 16% today. I think both will still get dragged down with the rest of the sector. Long term probably a good buy, short term probably not. Having said that I will be wrong and they will soar and I will have missed out! Just too risky right now unless you have lots of cash. If you can't afford to lose money now is not the best time.

[fish fingers]

I work for a better positioned Investment bank than Lehman and have been doing some 15/16 hour days this week as a result of their crash. Fun times indeed

[stevegrant]

I work for a better positioned Investment bank than Lehman

Not really saying much, is it?

[mdearlove]

I work for a better positioned Investment bank than Lehman

 

I think my wallet looks better positioned than Lehman right now!

[Beckster Von Doodle]

Comapared to Local gov't/NHS, charities, etc they certainly are! I probably get paid at least 2k a year less than I could in private sector but the way they have acted and they I would get treated is exactley why I don't!

 

Or is it because its an easier life in local gvt/nhs/charities etc?

 

My cousin works for Lehmans. For what he does, I don't think he earns a bad wage but then again he doesn't earn a fortune. I think a lot of it is down to London rates. He's pretty ****ed as he has exchanged contracts to buy a new property in london and now has no job so unless he can find a job pretty sharpish he'll lose his 10% deposit and the builder can probably sue him too. Happy days.

[bridge too far]

Or is it because its an easier life in local gvt/nhs/charities etc?

 

........

 

You are kidding, right?

 

I have never known a bunch of people work so hard and so long as those I worked with in the NHS. Working 18 or 19 hours a day to meet a project deadline was the norm, I promise you.

 

I hope everything works out OK for your cousin BTW.

[Beckster Von Doodle]

You are kidding, right?

 

I have never known a bunch of people work so hard and so long as those I worked with in the NHS. Working 18 or 19 hours a day to meet a project deadline was the norm, I promise you.

 

I hope everything works out OK for your cousin BTW.

 

Fair play, I know that people within the NHS work really hard ... but I know a lot of people who work in government do so because its easy to fade into the background.

[Crouchie's Lawyer]

I think a lot of people are quick to jump onto the 'Mortgage brokers = evil people' bandwagon because of the Panorama documentaries portraying this.

 

I am or was a mortgage broker. One of the main lenders when I started in 2006 that we used were a Lehmanns Brother company called Southern Pacific (SPML). Due to the Lehmanns problems, SPML stopped lending late early this year and consequently a lot of brokers who used them started to struggle, including the company I worked for. I decided to jump before the ship sank and although heavily waterlogged and IMO still sinking the broker I used to work for is still trading although I have come to realise that the owners are very dodgy.

 

I find that a lot of the negative press about brokers is coming from very small companies or one man bands wanting to make a very quick buck and having no morals, will do anything to achieve this. One of my colleagues knows of a company who would fraudulently photocopy a passpork and docture the DOB so the client fit into the age brackets of a lender. This kind of brokering is the 1% which has led to a bad name for the 99% of other brokers out there.

 

A lot does have to be put on the client though and this is the one main gripe I personally had about the panorama program. While they were filming Spazzy McIdiot having just been reposessed as his mortgage payments went up and up and up and his mortgage was obtained on the basis of his income being higher than it actually was, not once was it pointed out that a) You signed all the documents with this information on so would have realised the application was based on a lie and in signing it, are actually committing as much fraud as the broker who is doing it for you. And b) had you read through the paperwork, it would have explained that your mortgage has the potential to go down OR UP so it was a risk you took.

 

I understand a lot of people are mortgage illiterate and wouldnt know where to start let alone what is what which is why a broker is required, however filling in an application for with your information is not something which can be misunderstood and consequently, the people who had had their income inflated by these brokers are IMO just as bad as the brokers who did it for them.

 

The other point regarding people who moaned about the rates going up and their mortgages becoming too much to afford is that (and I have seen dozens of examples like this) when the mortgage was originally advised, their financial situation is looked and and the recommendation is then given taking this into consideration. If a lender allows 4 times your income (a lot of lenders now work on 'affordability' though) and you earn £30k, of course a mortgage of £100k is within your limits, providing you do not have much unsecured debts at time of application. So even a few mortgage rate increases (presuming your on a variable rate) shouldnt make that much of a difference to your ability to afford the mortgage.

 

The problem comes in the following form and I would put money on it, that a lot of the reposessions over the last year and repo's which will happen in the future were and will be because of the following.

 

Credit card companies and personal loan companies dont tend to care what your income is. They also dont cross check (on an auto application, its different if its manually looked into which is hardly ever) how much other debt you have, yet they were (its a little tighter now, but still fairly easy) still dishing out credit left right and centre.

 

So Mr Jones who is on £30k a year and has just got a mortgage of £100k which is well within his affordability limits gets his nice new house and wants a new bathroom, kitchen and to redecorate. He takes out a personal loan (as there is not sufficient equity in the house to take a home loan and he has only just got his mortgage). Payments of this loan plus the mortgage and ever increasing council tax and utility bills start to mount up and while still affordable, make it difficult for Mr Jones to live the lifestyle he did before he got his house, clubbing most weeks with his mates, holidaying once or twice a year to a nice destination. Temptation is always very hard to resist, especially in todays 'buy now pay later, must have it now, credit' generation and a nice credit card application arrives on the door of Mr Jones house the day after his mates all decide to go on a lads holiday to Ibiza. Mr Jones whacks the cost of this on his credit card as he has no money to pay upfront for it. He will simply pay it off in installments. Once he gets back from his holiday interest rates go up two or three times. Now this wouldnt have been a problem under the advice given by the mortgage broker originally as his income could have supported this but now, having easily obtained a large personal loan and with a few grand on a credit card, it makes it impossible.

 

End result? Mr Jones has his house reposessed and gets made bankrupt. Who gets the blame? The credit card or loan company for allowing him to take the credit card / loan out when it was clear he couldnt afford it? No, the mortgage broker!

 

However, when the FSA look into it, quite often this is spotted and consequently the broker (quite rightly) doesnt get fined or told off yet this isnt highlighted in the press and consequently the broker is made to look bad!

 

The credit crunch has happended for a number of reasons but the fact that the dopey yank companies like the Lehmann Brothers accepted applications in the states which were known as NINJA (No Income No Jobs or Assets) loans has IMO majorly contributed to this so at the end of the day it was their own doings which were the eventual downfall of themselves.

 

As you can see, I am quite bitter however my loss of income this year is a direct result of the credit crunch and when your income is cut by 70% or so, then I think you have reason to be p!$$ed off