Pages

Saturday, September 20, 2008

A hint of scandal - perhaps. One difference between Lehman Brothers and the host of rescued Wall Street investment market players.

In an earlier post, here, I wrote:

There was a bailout with federal portfolio risk guarantees for the acquisition of Bear-Stearns, but not a parallel thing for Lehman Brothers. The politics of such decision making probably will surface if the distinction was politically motivated. The explanation I have seen is that Bear-Stearns was a precipitous unanticipated happening whereas Lehman Brothers was a situation recognized for quite some time. That seems to be blowing smoke, and I expect looking either at the persons and firms involved in one instance vs the other, or at possible portfolio differences might be informative. [...]


I was perplexed by the one exception in a time when the contagion seems market-wide. Why was one firm left to take gas, with all others, so far, apparently being handled more gently, even Bear Stearns, where there apparently was clear fraud.

And the bailouts over the short time frame involved show a pattern. They now surround the Lehman Brothers isolated bankruptcy situation - bailouts before, bailouts after, but no bailout for Lehman.

In saying, "The politics of such decision making probably will surface if the distinction was politically motivated," perhaps this is unfolding.

Huffington Post, Seth Colter Walls writing Tuesday, Sept. 16, noted:

McCain Rips "Fat Cats" Instrumental In Funding His Campaign
September 16, 2008 01:32 PM


John McCain struck a tough, quasi-populist pose this morning during his morning sweep of the television news shows. Speaking to NBC's Matt Lauer about the current crisis on Wall Street, the Republican nominee said executives have "treated it like a casino and need to be held accountable and stop walking away with these fat-cat packages."

Leave aside for the moment the fact that one of McCain's top economic advisers, former Hewlett Packard CEO Carly Fiorina, walked away with a $42 million "golden parachute" after being fired. Overall, the generic Wall Street "fat cat" is a tough character for McCain to cast as his nemesis, given his success in fundraising among their ranks. As Bloomberg reported Monday night, securities and investment companies have collectively donated millions to both McCain and Barack Obama.

Employees from Merrill Lynch, one of the two big disaster stories in Monday's economic news, have donated over $100,000 more to McCain than Obama in this cycle. As Bloomberg reported, McCain's "largest campaign donors" were employees of Merrill Lynch, as well as their families, who in total gave the Arizonan $298,413.

Lehman Brothers, by contrast, donated almost three times as much to Obama as McCain. [...]


Aside from more "Honest John" irony being reported and indirectly editorialized, the Huffington item linked to its campaign donation reporting data for many of the Wall Street players now in the news.

Proving a politically motivated bias against Lehman probably would involve detailed study of contribution patterns going back to the 2000 election, and advisory roles Lehman Brothers principals might have played for one party or the other. I have not thought to pursue that myself. If Huffington is on top of the issue as the Sept. 16 item hints, and the Dems in DC needed to have a sound current repair to the breached dike, things will come out.

It would be most unfortunate in a time when peoples' life savings are in peril to see any degree whatsoever of political favoritism or political retribution in the course of righting the course of a deregulated system suffering foreseeable consequences of the deregulatory zeal shown by some in the past. It would be unjust if those deregulation zealots also now might be playing favorites among those firms suffering deregulatory consequences they had a role in fostering, but for which they are not by any measure solely responsible.

If all animals on Animal Farm are not this time equal, with the pigs favoring themselves and each other, and if this shows clearly in the evidence, then it will not be good for the McCain candidacy.

And if it is there, it will be found and exposed.

Tracks in the mud if not perfectly covered can be followed. That is the nature of an Internet asset such as Huffington Post.

I strongly encourage any reader interested in these thoughts to access the Huffington item, and from there to link to the financial campaign disclosure information, to be a better informed voter this November.

I may do that myself but it is a step I admit I have not, so far, taken. From the local municipal level, through state-mandated disclosures, to the FEC and those that accumulate and report FEC data, there are a host of numbers to pursue, and I truly don't have the soul of an accountant. Like most people, I suffer the consequences of not reviewing many things in the public domain to be reviewed. I hope my trust in Huffington to do the job well will not be misplaced.

_______UPDATE________
Reporting in Wall Street Journal, September 11, 2008, "Why Lehman Brothers Is Not Bear Stearns," is quite "old" in terms of how aspects of the entire big story are quickly unfolding and how government officials are acting and reacting, caucusing and conferencing.

That WSJ story notes a difference in how the options market played Lehman and Bear Stearns, for October Lehman call options in particular - and with the Lehman - Barkley's situation now unfolding, it is unclear whether the option betters will be well off or defunct, given Lehman in bankruptcy being dismembered. What's there to exercise an option against?

The Wall Street Journal item, to me, serves only to underscore the perplexity of only this one firm being put under ether to quietly die. Strib carried its usual - an AP wire feed replete with facts but no insight, mingling Lehman news with oil price news, where I see no context for the mingling.

Strib has more Lehman reporting, and Google News currently has multiple Lehman stories available. Strib's picking up on the Ameriprise suit looks interesting. Information continues to surface, with the Strib and Google News links illustrative of a breaking fuller story, but not final as yet.

If any reader has additional perplexing or more informative Lehman-related reporting or editorial analysis found online for review, please in a comment post link information, for so far reporting seems to have said different treatment was accorded different firms, but with no believable causative distinctions beyond the single sentence Huffington reported. And there so much needs to be read into a reported pattern, with the tracking and presentation of detail not yet published. It takes a skeptic to infer political motivation from Lehman having more favorably contributed to Obama, and having by the administration and its appointee-advisors been treated less well than others; but if we are not prudent skeptics then what should we base our voting on, smiles and glibness?

I trust more detail will surface. I doubt it will be unequivocal and definitive beyond any reasonable doubt, but it certainly might preponderate on a more likely than not basis.

We wait.

We see.