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JPMorgan's Lehman Liability: Collateral Damage thestreet.com
NEW YORK (TheStreet) -- Lehman Brothers' claim that Barclays PLC (BCS Quote) owes it more than $8 billion could have implications for another important player in the saga of the failed investment bank: JPMorgan Chase (JPM Quote).
JPMorgan was Lehman's clearing bank and its largest secured creditor, according to JPMorgan's 2008 10-K filing. While the bank stated in the filing it anticipated claims would be made "against us and our security interests," little has come to light so far. JPMorgan spokespeople did not respond to e-mail messages or a phone call seeking comment.
In October, unsecured creditors claimed JPMorgan contributed to a "liquidity crisis" at Lehman ahead of its Chapter 11 bankruptcy protection filing, according to a report in The Wall Street Journal that cited court documents in the case. The report stated JPMorgan "withheld $17 billion in excess assets" from Lehman "in the days just prior to the filing." Several press reports, most recently in The New Yorker magazine, have described JPMorgan as making a multibillion dollar collateral call against Lehman in its final days before the Chapter 11 filing.
Lehman's unsecured creditors asked the bankruptcy court "for permission to investigate how Lehman ran out of money," according to The Wall Street Journal 's report. A representative from one of Lehman's creditors says he believes that investigation is still ongoing, but that could not immediately be confirmed.
JPMorgan has a reputation for playing hardball with companies it lends to. It is also being sued by Amaranth Advisors, a multibillion dollar hedge fund that collapsed in 2006 after a JPMorgan collateral call. JPMorgan then made hundreds of millions in profits taking Amaranth out of its positions, according to a report in The Wall Street Journal .
JPMorgan was also a major creditor of Merrill Lynch prior to its controversial sale to Bank of America (BAC Quote), a deal struck during the same hectic hours before Lehman's Chapter 11 filing Sept. 15.
Certainly Lehman's claim against Barclays, filed Tuesday, touches on issues similar to those that have been raised in relation to JPMorgan. In tallying up the amount it states Barclays owes, Lehman's claim includes $5 billion in excess collateral.
The claims against Barclays do not appear to have hit JPMorgan shares so far, though they may have contributed to the 15% surge in Lehman's stock on the pink sheets Wednesday. But as there is no precedent for Lehman Brothers' bankruptcy, investors in JPMorgan and other banks with large exposure to Lehman would be wise to keep an eye on the proceedings.
NEW YORK (TheStreet) -- Lehman Brothers' claim that Barclays PLC (BCS Quote) owes it more than $8 billion could have implications for another important player in the saga of the failed investment bank: JPMorgan Chase (JPM Quote).
JPMorgan was Lehman's clearing bank and its largest secured creditor, according to JPMorgan's 2008 10-K filing. While the bank stated in the filing it anticipated claims would be made "against us and our security interests," little has come to light so far. JPMorgan spokespeople did not respond to e-mail messages or a phone call seeking comment.
In October, unsecured creditors claimed JPMorgan contributed to a "liquidity crisis" at Lehman ahead of its Chapter 11 bankruptcy protection filing, according to a report in The Wall Street Journal that cited court documents in the case. The report stated JPMorgan "withheld $17 billion in excess assets" from Lehman "in the days just prior to the filing." Several press reports, most recently in The New Yorker magazine, have described JPMorgan as making a multibillion dollar collateral call against Lehman in its final days before the Chapter 11 filing.
Lehman's unsecured creditors asked the bankruptcy court "for permission to investigate how Lehman ran out of money," according to The Wall Street Journal 's report. A representative from one of Lehman's creditors says he believes that investigation is still ongoing, but that could not immediately be confirmed.
JPMorgan has a reputation for playing hardball with companies it lends to. It is also being sued by Amaranth Advisors, a multibillion dollar hedge fund that collapsed in 2006 after a JPMorgan collateral call. JPMorgan then made hundreds of millions in profits taking Amaranth out of its positions, according to a report in The Wall Street Journal .
JPMorgan was also a major creditor of Merrill Lynch prior to its controversial sale to Bank of America (BAC Quote), a deal struck during the same hectic hours before Lehman's Chapter 11 filing Sept. 15.
Certainly Lehman's claim against Barclays, filed Tuesday, touches on issues similar to those that have been raised in relation to JPMorgan. In tallying up the amount it states Barclays owes, Lehman's claim includes $5 billion in excess collateral.
The claims against Barclays do not appear to have hit JPMorgan shares so far, though they may have contributed to the 15% surge in Lehman's stock on the pink sheets Wednesday. But as there is no precedent for Lehman Brothers' bankruptcy, investors in JPMorgan and other banks with large exposure to Lehman would be wise to keep an eye on the proceedings.
An der Börse sind 2 mal 2 niemals 4, sondern 5 minus 1.
Man muß nur die Nerven haben, das minus 1 auszuhalten.
Man muß nur die Nerven haben, das minus 1 auszuhalten.
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