Levine on Wall Street: Lehman Still Bankrupt, Spitzer Still Jobless

Lehman's bankruptcy was complicated.

Lehman's bankruptcy was complicated.

If you're starting a job in finance this week, a funny thing to do would be, when someone mentions Lehman Brothers, you say, "Lehman Brothers? What's that? Never heard of it." Unless that's true, in which case you'll look dumb and I'll feel old. Anyway, on the occasion of the impending fifth anniversary of the firm's demise, you can read Bloomberg's account of how their bankruptcy lawyer, Harvey Miller, thinks his work was worth $2 billion dollars. To be fair, he's not alone; Lehman's unsecured creditors are recovering 18 to 22 cents on the dollar from the $639 billion case, which is more than they expected, due in part to the estate's rather vigorous pursuit of its rights in court.

Treasury is also pretty pleased with its financial crisis response.

In more five-years-ago news, the Department of the Treasury released a ... pitchbook? ... called "The Financial Crisis Five Years Later: Response, Reform, and Progress" (pdf) that is worth flipping through. It's a good short overview of the financial crisis in the U.S. and the government's response, though possibly more self-congratulatory than you might like. The checklist on slide 13 shows the goals of post-crisis financial reform -- "Improving accountability and transparency," "Ending 'too big to fail,'" "Ending taxpayer bailouts," and "Protecting consumers" -- and they're all checked off. That seems optimistic.

Verizon's $20-billion-plus bond deal from yesterday is now $49 billion.

That's a big bond deal! As big as, like, the next three biggest corporate bond deals of all time combined. Repricing the corporate bond market has, I suppose, the advantage that everyone wants in at the new price. If you bought corporate bonds this year you've probably lost money, in part because of rising Treasury rates but also in non-zero part because all this supply from Verizon is pushing spreads wider. So you might as well make some quick money by buying Verizon at a new issue concession.

Richmond really thinks it might eminent-domain some mortgages.

A company called Mortgage Resolution Partners has an endearingly goofy plan for cities to force investors to write down underwater mortgages through the use of eminent domain, taking money from mortgage investors and divvying it up among the cities, the homeowners, and of course Mortgage Resolution Partners. So far it's managed to convince the city of Richmond, California, that it's a good idea. Yesterday the city council voted to, basically, not stop talking about how it's going to do that. It's probably not going to do that! Trustees for investors have sued to stop it, and the federal government is extremely not keen on the plan, so whatever its theoretical merits it seems unlikely in practice to actually help Richmond homeowners. But it will continue to be fun to talk about for a while.

Eliot Spitzer will not be comptroller of New York City.

A theme of Spitzer's campaign was that the evil Wall Street fat cats whom he'd pestered as New York's attorney general and governor didn't want him to get back into elected office to run New York City's $139 billion in pension funds. Boy was that ever right! Score one for the fat cats; it seems that Spitzer is not the only person who can nurse a grudge. If you're starting a job in finance this week, saying "Eliot Spitzer? Who? Never heard of him" would also go over well.

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    To contact the author on this story:
    Matthew S Levine at mlevine51@bloomberg.net

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