Thursday, September 04, 2008

Business Media's Continuing Focus on Lehman

CNBC and The Wall Street Journal have continued their focus on ailing investment bank Lehman in the past week. This morning's Journal carried an article on the firm's new president and COO, Herbert "Bart" McDade, while CNBC has been running pieces by Charlie Gasparino for weeks. Charlie breathlessly confides his latest inside information on the crippled financial firm.

Honestly, I'm not sure I understand what all the fuss is about.

Yes, I do realize that, in a slow August summer season, Lehman's death-throes create stories, fill airtime and columns. Yes, I understand it's entertaining.

But from a business sense, the coverage has gotten out of hand, hasn't it?

Today's Journal piece opined on "Bart"- you have to love these Wall Street nicknames- McDade's potential to be Lehman's next CEO.

Does anyone else even think there will be another Lehman CEO? Or that, if there is one, it will be either for longer than it takes to sell the wreckage to another firm or firms, or, be hardly worth having, so small and insignificant will the impaired financial firm have become?

Earlier last week, the talk was all about Fuld creating a 'good bank, bad bank' structure to try to spin the bad assets at par value, in a tax free transactions, off of Lehman's balance sheet.

Then there was the article about Lehman's real estate interests, via loans to a large California land warehouser. Maybe they haven't properly written down the value of much of their exposure, an article contended.

The background drumbeat for all of this is Lehman's impending quarterly earnings announcement. All this planned pirouetting on the balance sheet is allegedly Fuld's attempt to delay or minimize further large losses on Lehman's rotten real estate-related assets.

As I last wrote about Lehman here, last week, Lehman is basically a collection of badly-purchased assets, bad management, and one still-reasonably valuable, separate asset management firm.

What's the big mystery about where this is headed?

Neuberger will be spun off, back to management, or sold for cash to another firm. One way or another, further asset value reductions will be realized, shareholder value will be further reduced, thanks to the long term effects of Fuld's ineptitude, and the firm will either shrink or die. Its valuable assets and positions will be taken over by other firms, equity value will take further hits, and the firm will finally leave the competitive field.

You can expect a lot more ink and air time over the precise manner and style of these steps. But you know, as I do, that they are coming- and soon.

I suppose you could arrange a pool with your colleagues to bet on whether or not Lehman will be around to issue a 4Q earnings release. Or the date on, or month during which the firm will finally cease its existence.

But isn't that about the only real mystery left in this story of greed, ego, and bad management on Wall Street?

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