Lehman may have to raise capital if sells assets
By Dan Wilchins
PART I
NEW YORK (Reuters) - Lehman Brothers Holdings Inc is expected to follow in Merrill Lynch & Co Inc's footsteps and sell a lot of risky assets at a loss. But shedding the assets may create another headache for Lehman -- the need to raise large amounts of new capital, including common equity.
Any capital raise would be painful for Lehman and its shareholders, given that the company just raised $6 billion in June and trades at a significant discount to its book value, or the net accounting value of its assets.
But Lehman, the fourth-largest U.S. investment bank, may have little choice as it wrestles with roughly $65 billion in mortgage-related assets, particularly after Merrill Lynch agreed to shed $30.6 billion in toxic assets at a fire-sale price of 22 cents in the dollar, analysts said.
"Lehman's caught between a rock and a hard place. They're getting more and more pressure from regulators and investors to add reserves or mark these things down," said David Hendler, an analyst at independent research firm CreditSights in New York.
"In normal times, they could wait it out, but the market wants it done now," Hendler added.
The New York Post reported on Friday that Lehman was talking to potential buyers about selling $30 billion in assets. CNBC television reported Friday that Lehman was in talks with BlackRock Inc to sell mortgage securities and other assets. Both Lehman and BlackRock declined to comment.
Lehman's chief financial officer told Merrill analyst Guy Moszkowski recently that the investment bank was willing to sell assets at a loss if the deal materially reduced risk, the analyst said in a report. Lehman had roughly $65 billion in mortgage and real estate-related assets on its balance sheet as of May 31.
Continued...
...

Iran Tests Anti-Ship Weapon, Repeats Stance on Hormuz (Update4)

By Camilla Hall

Aug. 4 (Bloomberg) -- Iran's military tested a new anti- ship weapon, the commander of the Islamic Revolutionary Guards Corps said as he repeated a warning that his forces could respond to any attack by closing the Strait of Hormuz, an oil transit point.

The weapon relies on technology that hasn't been used by other nations, Brigadier General Mohammad-Ali Ja'fari said today in comments carried by state-run news services including Press TV and the Islamic Republic News Agency. The weapon has a range of more than 300 kilometers (185 miles), IRNA said without giving details of the type of armament tested.

The Strait of Hormuz, at the mouth of the Persian Gulf, is a chokepoint between Iran and Oman through which about a fifth of the world's daily oil supply is shipped. Tensions over Iran's nuclear program escalated, helping to send the price of crude to a record, after Ja'fari's June 28 warning that Iran would ``impose control'' on the Gulf, including the strait, in response to any attack on its atomic installations.

The naval weapon ``is definitely capable of sending any warship within a distance of 300 kilometers to the bottom of the sea,'' Press TV cited Ja'fari as saying. ``The length of Iran's coastline along the Strait of Hormuz, its unique geographical position and the coastal heights make it possible for Iran to close off the strait.''

The announcement of the weapon test came as world powers were waiting for Iran's response to an offer from the U.S., Russia, China, France, the U.K. and Germany of economic and diplomatic incentives in exchange for the suspension of its uranium-enrichment program. European Union and U.S. officials gave Iran about two weeks to respond to the package during July 19 talks on the nuclear dispute in Geneva. ...

Greenspan says more banks, institutions may founder
Mon Aug 4, 2008 6:46pm EDT
PART I

LONDON (Reuters) - More banks and financial institutions are likely to face insolvency and need bailouts before the global financial crisis is over, according to former Federal Reserve chairman Alan Greenspan.
Writing in the Financial Times, Greenspan called the current crisis -- which started a year ago -- a once or twice in a century event and said insolvency would only end once U.S. house prices stabilized, underpinning mortgage-backed securities.
Until then, the threat of collapse among banks and other global financial institutions would persist.
"Fears of insolvency have not, as yet, been fully set aside," Greenspan wrote in an article published online on Monday. "There may be numbers of banks and other financial institutions that, at the edge of defaulting, will end up being bailed out by governments."
The former Fed boss, who stepped down as chairman in 2006 after nearly 20 years in the job, said a "sustained level of global equity prices" was critical if banks were to recapitalize themselves and reassure skittish investors.
By extension, continued falls in global equity prices would have a debilitating impact, he said, despite the offset of rising global savings rates.
"Lower global stock prices could impede the recapitalization of banks and other financial institutions. Debt issuance would also be suppressed as it leverages off the level of equity," he wrote.
"The price of equities worldwide will determine whether the international financial system can maintain a modicum of stability as it eases out of its credit crunch, or falls back into another period of angst and turmoil."
Greenspan said increased market regulation was not the answer, and could do more harm than good. Continued…………

...

Greenspan says more banks, institutions may founder
Mon Aug 4, 2008 6:46pm EDT

PART II

"The cause of our economic despair, however, is human nature's propensity to sway from fear to euphoria and back, a condition that no economic paradigm has proved capable of suppressing without severe hardship," he said.

"Regulation, the alleged effective solution to today's crisis, has never been able to eliminate history's crises."

Instead of believing that more rigidity in the system would prevent breakdown, he said continued flexibility was required.

"We may not easily confront or accept the price dynamics of home and equity prices, but we can fend off cries of political despair which counsel the containment of competitive markets.

"It is essential that we do so. The remarkably strong performance of the world economy since the near-universal adoption of market capitalism is testament to the benefits of increasing economic flexibility."

(Reporting by Luke Baker; editing by Andrew Roche)
SOURCE :REUTERS...

Greenspan says more banks, institutions may founder
Mon Aug 4, 2008 6:46pm EDT
PART I

LONDON (Reuters) - More banks and financial institutions are likely to face insolvency and need bailouts before the global financial crisis is over, according to former Federal Reserve chairman Alan Greenspan.

Writing in the Financial Times, Greenspan called the current crisis -- which started a year ago -- a once or twice in a century event and said insolvency would only end once U.S. house prices stabilized, underpinning mortgage-backed securities.

Until then, the threat of collapse among banks and other global financial institutions would persist.

\\\\...

Two More Banks Fail
Regulators Seize First Heritage,
First National Bank of Nevada
By DAMIAN PALETTA
July 27, 2008 1:48 a.m.

WASHINGTON -- Federal regulators shut down two national banks late Friday in the latest chapter of the credit crisis, and the Federal Deposit Insurance Corp. successfully protected all depositors by selling the accounts to Mutual of Omaha Bank.

The Office of the Comptroller of the Currency, a division of the Treasury Department, revoked the charters of First National Bank of Nevada, based in Reno, Nev., and First Heritage Bank of Newport Beach, Calif. The FDIC was appointed receiver of both banks.

Both those banks were units of First National Bank Holding Co., based in Scottsdale, Ariz.

First National Bank of Nevada had .4 billion in assets and .0 billion of deposits, making it a relatively large failure by historical standards -- but much smaller than the billion of assets that IndyMac Bank of Pasadena, Calif., had when it failed earlier this month. First National Bank of Nevada had 25 branches, some of which came from its June 30 merger with the First National Bank of Arizona.

The OCC said First National Bank of Nevada \\\\...

India_bulls,

What happened to your cybermate call?
KUD
...

Reply to Kalpesh & Rohit & so called Buffet 777, It looks like you guys are interested in finding some fault in me by quoting me out of context. First of all, you neverread my all posts, pick up some in the middle and then go on complimenting yourself that you were right and those who followed me were the heavy losers. KUD was also right that I am not day in day out trader. Now, lt me put the facts straight on your face, and if you can read simple English and some numbers from 1 to 9, then look at the following facts: I initially gave SELL call in late December, and suggested to sell at least 70% of portfolio by 16/1/2008; The index plunged by 3000 points in 2 days on 22/1 and 23/1. I again gave a SELL call to sell even remaining 30% and remain 100% cash by 31-Mar-2008 and the stocks slumped even further: Now look at the following numbers of both Companies - Reliance Industries Ltd. and Larsen Toubro Ltd: RELIANCE INDUSTRIES LTD Date --------- Close --------Volume 31-Dec-07 ---- 2,887.50 ----1,281,300 15-Jan-08 ---- 3,156.00 ----3,798,600 22-Jan-08 ---- 2,360.70 ----8,766,200 31-Mar-08 ---- 2,252.70 ----3,096,500 16-Jul-08 ---- 1,957.25 ----3,876,600 Down 32.22% from first SELL call LARSEN TOUBRO LTD. 31-Dec-07 ---- 4,165.00 --- 207,800 15-Jan-08 ---- 4,066.00 --- 689,900 22-Jan-08 ---- 3,590.00 ---1,545,600 31-Mar-08 ---- 3,004.00 --- 844,500 16-Jul-08 ---- 2,289.80 ---1,107,500 Down 45% from First SELL call. So Mr. Kalpesh, Rohit and Buffet 777, look at the above facts. The people who SOLD at my instance, did not lose money - they are saving almost 32% to 45%. Please note that "down" % is counted from higher base. If the stock drops by 50%, it has to double or up by 100% before even breaking even. Further, the volume on 15/7/08 for RIL was 3,798,600 shares- that is the Investors who sold. The value comes to Rs 1200 crores. Since the investors who sold them have saved by 45%, means that they saved 1200 x 32% = Rs 384 crores. Similarly, look at L&T. 689,000 shares were sold @ Rs 4066 or worth Rs 280 crores. They saved 45% or Rs 126 crores. Between them I saved about Rs 510 crores, and that too for 1 day trading. Count the trading days from 31/12/07 to 16/1/2008 - I must have saved about Rs 7000 crores. Do you have vision to achieve what I achieved? Those who followed you must be vetting their pants. One day's rally due to political factor is not going to sustain. This is my performance. So do not try to follow cheap methods to derogate me in the eyes of other boarders. If you want to come up, try to be better than other standard. Do not try to lower the standard itself just to make you look bigger. I really did not want to reply, once I decided to terminate the thread. But my lack of reply would have meant your strength. So I replied. I do not normally entertain the cheap posts like yours. I have better things to do. Kalidas, Hong Kong 25/07/2008...

Thanks KUD...but i am going long.. i havent seen such a bullish dow daily data......

Dear Kalidas, Pl. start a new thread or post your blog address. We are missing your daily posts. These posts are invaluable for small investors like me. Regards, Mohan...