Kabuki: Lehman and a Cast of Thousands

A cloud of rumors and denials surrounding Asian acquisitions of LEH. While this has been going on for a while with KDB, recently HSBC and an "unnamed Chinese bank" were tossed into the rumor mill:

HSBC, Chinese Bank Reported To Be Interested in Lehman

One of the pet notions of M&A is that anything can be solved by price. Thus even a garbage barge embattled institution like Lehman might could be a screaming bargain at the right level. So it's possible that HSBC and the unnamed Chinese bank are indeed interested in Lehman, but "interested" covers a multitude of sins. I came up with one possible explanation:

Cash Mundy said...

Reading about Korea's need to defend the won and difficulties doing so due to illiquid GSE holdings, it occurred to me that there might be a subtext to KDB's apparently nonsensical LEH bid, somehow resulting in the "Fannie, Freddie and other US-related agency" paper turning into cash or treasuries as a quid-pro-quo for rescuing LEH. I read Jesse's posting, and it looks like "a Wall Street Bond trader" has the same idea. From Jesse: Curiouser and curiouser. A Wall Street bond trader of our acquaintance has suggested that Hank made some princely gestures vis à vis Korea's huge holdings of Fannie and Freddie in return for some sugar on the Lehman problem. Maybe a stealth uncompensated taxpayer bailout of LEH, FNM and FRE can be quietly packaged up and sold in this way.

Jesse reported that Mitsubishi was put forward, then denied interest:

Jesse said...

Yep. the Mitsubishi interest floated out by The Times has also turned out to be a false rumour. curiouser and curiouser. http://jessescrossroadscafe.blogspot.com/2008/09/times-of-london-report-another-false.html