This could be kosher but a correspondent who sent this to me suggests otherwise:
JPMorgan Gave Lehman $138 Billion After Bankruptcy (Update3)
By Tiffany Kary and Chris Scinta
Sept. 16 (Bloomberg) — 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 first advance was repaid by the Federal Reserve Bank of New York on the night of Sept. 15, Lehman said. JPMorgan said in a statement that the $51 billion advance was also repaid and the process will zero out the advances at the end of each day.
U.S. Bankruptcy Judge James Peck in Manhattan approved an order confirming that advances JPMorgan is providing are covered by existing collateral agreements with Lehman and its affiliates. JPMorgan holds about $17 billion in collateral to secure the money it advances to clear the trades, Lehman attorney Richard Krasnow said.
`Comfort Order’
“I believe the comfort order for the benefit of JPMorgan Chase under these clearance agreements, while unusual in my experience, is entirely appropriate,” Peck said. There were no objections to the request.”
Other than the inherent evil of central banking itself, I don’t see anything particularly nefarious here. JPM can borrow from the Fed any time anyway, and it’s simply good business to make sure they have a perfected claim on the collateral that a firm in bankruptcy is pledging them. Even if the collateral is not the normal stuff the Fed would accept, that’s not any kind of an obstacle …as we’ve seen this last few months.
I think there was an implication that it wasn’t just a loan.
more digging needed. There’s been a persistent rumor that another bank was going under. A big one.
I don’t think it’s that important. All fiat money is debt based anyway, so even if the Fed just handed a gazillion dollars to JPM in a briefcase, I don’t see it being anything more than an additional example of the crookedness of crooks.
As far as who is going under, I’d vote for B of A choking on the corpse of Merrill… but in this environment it could be anybody. If I recall, the biggest derivatives-exposed banks besides JPM are Citi, HSBC, Wachovia, and B of A.
Oh… and I’m going to miss those WaMu commercials with the bankers all tied up in the basement. Now there’s some irony… if those stodgy old guys had been running the show, maybe WaMu would have survived. Whoo-hoo! Perhaps that should be Boo-Hoo now… or Nelson Muntz’s famous Ha-ha!
I’m interested in finding out how GS always comes out of things fine…
If JPMorgan is in trouble….wondering whether we’ll get one or the other being merged to form Morgan-Goldman or something like that.
Michael Hudson had a good piece on how loans are likely to be paid off..
like they were after the 80s…very high credit charges..deposit fees…higher sales taxes…