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Fallout: The Financial Crisis

Today Lehman’s is in bankruptcy court

Marketplace Staff Sep 19, 2008
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Fallout: The Financial Crisis

Today Lehman’s is in bankruptcy court

Marketplace Staff Sep 19, 2008
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COPY

TEXT OF STORY

Scott Jagow: Today, a bankruptcy judge is expected to sign off on the Lehman Brothers-Barclays deal. For the bargain basement price of 1.7 billion dollars, Barclays will take over Lehman’s North American investment banking and trading business. But Lehman will have a few parts leftover. Marketplace’s Amy Scott reports.


Amy Scott: What’s left are Lehman’s valuable asset-management firm Neuberger Berman, its hedge fund and private equity businesses, And troubled assets like mortgage backed securities and commercial real estate holdings. Rob Hegarty is with research firm Tower Group. He says Neuberger Berman will likely find a buyer. Anything that can’t be sold will be taken over by a bankruptcy trustee.

Rob Hegarty: And that trustee then takes those assets and does the best job that they can of getting them off the books, and that usually means selling them at a deep, deep discount.

Analysts expect the bankruptcy court to sign off on the Barclays deal quickly. Eileen Fahey with Fitch Ratings says waiting too long could further erode Lehman’s value.

Eileen Fahey: The assets are the people because they bring in the business, and the clients that are tied to those people. So the longer you wait to sell that kind of a business, the worse it gets.

That’s because, unlike mortgage-backed securities or real estate, people can walk out the door.

In New York, I’m Amy Scott for Marketplace

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