Wednesday, 17 September 2008

JPMorgan Gave Lehman $138 Billion After Bankruptcy

JPMorgan Chase & Co. gave $138 billion this week in Federal Reserve-backed advances to the broker dealer unit of Lehman Brothers Holdings Inc. to settle Lehman trades and keep financial markets stable amid the biggest bankruptcy in history, according to a court filing.

One advance of $87 billion was made on Sept. 15 after the pre-dawn bankruptcy filing, and another of $51 billion was made today, Lehman said in court documents. Both advances were made to settle securities transactions with customers of Lehman and its clearance parties, according to the filing.

The advances were necessary ``to avoid a disruption of the financial markets,'' Lehman said in the filing.

The amounts here are so huge because the banks had leveraged tons of money in order to make huge profits. Now that things have gone sour they owe more than they have- hence the trouble with the ongoing bailouts- there is simply not enough real money to cover all the leveraged losses.

[Posted at the SpookyWeather blog, September 17th, 2008.]

No comments: