Local governments and school districts want bailout too
San Mateo County and others lost $1.7 billion because of Lehman Brothers collapse
By ALAN ZIBEL (AP)
WASHINGTON — Two lawmakers say Lehman Brothers' historic collapse cost school districts and local governments millions, forcing many to make major cutbacks.
Rep. Anna Eshoo, D-Calif., said 40 municipalities nationwide lost around $1.7 billion after the firm went under. She is introducing legislation that would require the federal government to compensate those governments.
At a hearing Tuesday probing what led to Lehman's collapse, Eshoo said San Mateo County, which is in her district, lost $155 million.
Lehman's meltdown in September 2008 was the biggest corporate bankruptcy in U.S. history. It threw global financial markets into crisis.
Another lawmaker said numerous governments suffered huge losses.
"These were school districts and local governments that made investments that they believed were conservative," said Rep. Ed Perlmutter, D-Colo. "They trusted that federal regulators were keeping a watchful eye on companies like Lehman Brothers."
The former chief executive for Lehman is scheduled to testify at the hearing, which will probe a bankruptcy examiner's report that the firm masked $50 billion in debt.
The examiner, Anton Valukas, however, criticized the company and the Securities and Exchange Commission. Lehman, he said, "was significantly and persistently in excess of its own risk limits," he said in prepared remarks. The SEC, meanwhile, "was aware of these excesses and simply acquiesced."
(More here.)
By ALAN ZIBEL (AP)
WASHINGTON — Two lawmakers say Lehman Brothers' historic collapse cost school districts and local governments millions, forcing many to make major cutbacks.
Rep. Anna Eshoo, D-Calif., said 40 municipalities nationwide lost around $1.7 billion after the firm went under. She is introducing legislation that would require the federal government to compensate those governments.
At a hearing Tuesday probing what led to Lehman's collapse, Eshoo said San Mateo County, which is in her district, lost $155 million.
Lehman's meltdown in September 2008 was the biggest corporate bankruptcy in U.S. history. It threw global financial markets into crisis.
Another lawmaker said numerous governments suffered huge losses.
"These were school districts and local governments that made investments that they believed were conservative," said Rep. Ed Perlmutter, D-Colo. "They trusted that federal regulators were keeping a watchful eye on companies like Lehman Brothers."
The former chief executive for Lehman is scheduled to testify at the hearing, which will probe a bankruptcy examiner's report that the firm masked $50 billion in debt.
The examiner, Anton Valukas, however, criticized the company and the Securities and Exchange Commission. Lehman, he said, "was significantly and persistently in excess of its own risk limits," he said in prepared remarks. The SEC, meanwhile, "was aware of these excesses and simply acquiesced."
(More here.)
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2 Comments:
if anyone has any doubts that we have reached the point of Mussolini's corporate state, you're a fool. We have no free markets any more, just entities that want government to carve out a market or a niche and then have government there to bail them out when the fail. I mean - think of it - what in our country isn't subsidized? We no longer have two parties that disagree on principle, they only disagree on the matter of degree. We no longer argue whether or not to have subsidies, or bailouts, or stimulus packages, or runup the debt. All the Republicans and Democrats argue about is who gets subsidized and how much, who gets bailed out and who doesn't, who gets stimulus largesse and who doesn't and on and on. Well, why not the schools who are a wholly owned subsidiary of the federal government get their bailouts. We bailed out Goldman Sachs by proxy when we bailed out AIG and made AIG the fall guy in the process, but the reason to bailout AIG was to prevent Goldman from going under. We have companies who don't compete in the market, but rather hire and army of lobbyists to go to Washington and get the government to carve out a market for them and force us to buy their products. Why not the schools? Because we have reached the point where we are socialist nation where everything is subsidized.
Did anyone see the House Financial Services Committee meeting with Lehman's CEO and Board the other day ?
It was apparent that Lehman got caught in a game of musical chairs and they were left standing when the music stopped. Lehmann had adequate reserves, but the market panicked.
No doubt that the executives of these companies were grossly compensated, but the investors got hit hard ... overnight, the stock of some of these companies collapsed and there was no bailout for the investor.
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