Will Disclosure In Lehman Bankruptcy Case Lead To Lawsuit Against Federal Reserve?

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Reporters at
the Wall Street Journal have uncovered something very intriguing
while they were combing through the billing records of Jenner and
Block, whose chairman, Anton Valukas is currently moonlighting as
the examiner of the Lehman Bankruptcy Case. In J&B’s
August fee statement
, the firm discloses information that as
part of its estate recoupment process, it has been contemplating
suing none other than the Federal Reserve.

During its
final days Lehman was a revolving door for Fed cash coming in (and
promptly leaving) as the situation demanded. Whether borrowing at
the Fed’s discount window against garbage collateral (no doubt consisting
of worthless toxic commercial real estate – yet, we will never
know: the Fed has just appealed the decision to disclose who/what/why
got access to its processing of taxpayer bailout funding, which
likely means that unless some Second Circuit/SCOTUS judge finds
it deep in his/her soul that representing the American public is
more important than siding with Wall Street as always, that information
will never see the light of day), using the
TAF program
, or otherwise, Lehman ended up gobbling an ungodly
amount of cash from the Fed which was subsequently improperly yanked
by the Chairman, instead of being used to satisfy pari passu creditor
claims. According
to the WSJ

The New
York Fed lent Lehman $46.2 billion in cash and Treasury securities
for $50.6 billion in collateral, according to Federal Reserve
affidavits filed in bankruptcy court. As a result of Lehman’s
sale to Barclays PLC following its bankruptcy, the New York Fed
was later paid back in cash, with the Treasury securities returned.
Lehman’s broker-dealer also borrowed tens of billions of dollars
from the Fed in the period from Sept. 11 through Sept. 15 last

the rest of the article

5, 2009

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