Marketplace Scratch Pad

Morning Reading

Scott Jagow Mar 12, 2010

Happy Friday. This morning, go inside the purchase of a toxic asset, why Wall Street hates Elizabeth Warren and a coroner’s report on Lehman Brothers:

We Bought A Toxic Asset; You Can Watch It Die (NPR)

We spend two days with Solberg looking for the right toxic asset. One, full of what appear to be California McMansions, seems promising. Solberg prints out a 604-page prospectus that reads like a historical record of the entire financial crisis. It’s all in there — vaporized companies, people struggling to pay their mortgages, and some horribly complicated logic describing which bond holders get paid, in which order, under which conditions. But that bond falls through, too.

Finally, we find a beautiful, totally toxic asset at what Solberg thinks is a good price: $36,000. Back in the bubble, somebody paid $2.7 million for this thing. We buy a piece from Solberg for $1,000. It’s going to be our encyclopedia of the financial crisis.

Why Wall Street hates Elizabeth Warren (Newsweek)

Obama was standing in a glass-enclosed room with the afternoon sun glowing from behind, silhouetting him: “He was backlit!” As she walked down toward him he turned, stuck out his hand, and said, “Predatory lending! We have to do something about predatory lending!” He raved on as she stood and stared at him, dumbstruck. When he paused, she smiled and said, “You had me at predatory lending.”

Report details how Lehman Brothers hid its woes (New York Times)

The 158-year-old company, it concluded, died from multiple causes. Among them were bad mortgage holdings and, less directly, demands by rivals like JPMorgan Chase and Citigroup, that the foundering bank post collateral against loans it desperately needed.

But the examiner, Anton R. Valukas, also for the first time, laid out what the report characterized as “materially misleading” accounting gimmicks that Lehman used to mask the perilous state of its finances.

The Hollywood Stock Exchange will be a casino (Washington Post)

If nothing else, the movie exchange is an obvious invitation to trading with insider information, allowing those who are actually producing a movie to bet on its outcome against outsiders who have never read the script, reviewed the dailies or seen the marketing budget. And surely it won’t be long before theater owners and moviegoers begin checking prices on the exchange before deciding which films to show and attend, thereby altering the very outcomes that the exchange is meant to forecast.

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