Saturday marks the 4th anniversary of Lehman Brothers bank filing for bankruptcy protection.And while some may consider this cause to walk down memory lane — a lane that lead to the collapse of the global economy. We think it’s better to look forward, and with the help of Planet Money’s Adam Davidson, visit Lehman Brothers’ office today.
According to Davidson’s reporting, Lehman Brothers lives on two floors (one is a trading floor) of the Time and Life building in New York City. The Bloomberg terminals are there, the young bankers are there, and most importantly, the legal department is there.
The thing is, all they’re doing over there is having a fire sale. Everything — every asset Lehman still has on the books — must go.
Lehman says the sale won’t be finished until 2017 at the very least. To find our more, you can listen to Davidson’s tour of the Lehman at NPR, or in the player below.
Or you can wait til Davidson’s full report comes out in New York Times Magazine this weekend. There was a preview in the NYT about his feature yesterday. Here’s an excerpt:
The Lehman Brothers office in Midtown makes up around a third of the original company, in terms of assets, and is responsible for paying back $360 billion in more than 60,000 claims. It has already distributed around $22 billion and estimated that it will pay back another $40 billion — giving investors an average of 18 per cent of that $360 billion — by the time it closes its doors completely… The company’s entire business objective is to fulfil the terms of a 791-page legal document listing all of its unfulfilled financial promises. The task is even more overwhelming than it first appears. Each creditor is owed a different percentage based on the type of loan it gave and which division the creditor gave it to. Investors who lent money to Lehman’s commercial-paper subsidiary get a return of 56 cents on the dollar; those who bought a bond from the parent company are getting a little more than 20 cents. And each of those creditors can pursue a challenge and demand more money. One of the new Lehman’s busiest departments, not surprisingly, is legal.
One of the things that Davidson drives home in his reporting is that a shock like Lehman’s can happen again. That idea is whispered in candid conversations all over the Street, whether Washington politicians and regulators want to recognise that or not.
And here’s the NPR piece below:
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