Chapter 602: Interception

"Your Highness the Duke, we have become competitors this time..."

It was Barron's old acquaintance Rolf who negotiated the acquisition with Lehman Brothers on behalf of Barclays.

Not long after Barron was reborn into this world, when solving the debt problem of the Devonshire family, the head of credit at Barclays Bank was Rolf.

But later, through Rolf, Barron entered into in-depth cooperation with Barclays Bank. In the process, Barron's wealth increased dramatically.

Rolf's position is also constantly rising. Currently, he has become the vice president of Barclays Bank, specifically responsible for the negotiations for the acquisition of Lehman Brothers.

After hearing Rolf's words, Barron smiled and said:

"Although it seems that in this acquisition, we are competitors, but nothing is absolute, and we can also be a collaborator."

"what do you mean?"

"Wall Street should have cleaned up the mess caused by Wall Street, but now we are here as allies, but sometimes we are too aggressive and may not be taken seriously..."

Barron looked at Rolf and said:

"Just remember that I won't be your competitor."

At the time of this meeting between Barron and Rolfe, Bank of America announced that it had given up its acquisition of Lehman Brothers because the Federal Reserve refused to provide financial help for Bank of America's acquisition of Lehman Brothers.

Now the only remaining acquirers are two British banks, Standard Chartered Bank and Barclays Bank, which have become Lehman Brothers' lifeline.

"You should also have discovered that although we are sincere enough to acquire Lehman Brothers, the other party is still confident during the negotiations..."

Barron's words struck a chord with Rolf, and he couldn't help but complain:

"Ford, this greedy bastard, didn't just treat us like this. Didn't he do the same to the Development Bank of South Korea before? He was determined that the U.S. government would not let a huge investment bank like Lehman Brothers collapse and would always rescue them. So we have never let go of the price, but how could we pay for it at a price that is several times higher..."

This is indeed true. The U.S. government eventually rescued companies and banks such as Fannie and Freddie and Bear Stearns. Therefore, when it was certain that Lehman Brothers would eventually be rescued, its boss Fuld said: The asking price in the acquisition negotiations has been tight and unyielding.

"That's what he thinks..."

Barron said calmly to Rolf:

"But is that really going to be the case?"

"You mean...how is it possible!"

Hearing Barron's words, Rolf's eyes widened and he couldn't help but say.

…

Saturday, July 12th.

Although today is the weekend, based on the current situation of Lehman Brothers, if they cannot reach an acquisition agreement, they may declare bankruptcy by Monday.

On this day, negotiators from Standard Chartered Bank began final negotiations with Lehman Brothers. If they cannot reach an agreement today, then Lehman Brothers will only be able to negotiate with Barclays Bank again - because Standard Chartered Bank The banks were the only ones willing to make an all-cash acquisition rather than a stock exchange, and they were willing to acquire Lehman Brothers as a whole instead of divesting bad assets, so Lehman Brothers decided to negotiate with them first.

The negotiation lasted until two o'clock in the afternoon, and the two parties finally reached an agreement on the main terms of the acquisition. When they were about to sign the agreement, the negotiator from Standard Chartered Bank went out to answer a phone call and returned to the negotiating room. Lehman Brothers’ negotiating team said:

"I'm very sorry. This agreement no longer needs to be drafted. Our board of directors informed me to stop negotiations and we will terminate the acquisition from now on."

Time goes back to one day ago...

At 8 pm on Friday, July 11, an important meeting related to global economic security was being held nervously in the New York Fed conference room.

Attendees of this conference include: Goldman Sachs Group, Merrill Lynch Group, Morgan Stanley, JPMorgan Chase, Citibank, BNY Mellon, as well as Credit Suisse, BNP Paribas, Royal Bank of Scotland and UBS represent.

Of course, there are also US Treasury Secretary Paulson and Securities and Exchange Commission Chairman Cox.

New York Fed Chairman Geithner is the main convener of this meeting. He has only one goal, and that is to reach an agreement to rescue Lehman Brothers.

However, neither Lehman Brothers nor its potential acquirers Standard Chartered and Barclays received invitations.

"Thank you all for arriving at such short notice."

Treasury Secretary Paulson spoke first. He briefly introduced the precarious situation of Lehman Brothers and urged that a solution must be found before the end of this week.

To let attendees know the focus of the solution, Paulson put it bluntly:

"Don't expect government funding. You are the protagonist in solving the problem. If Lehman ceased to exist, our lives would be even more difficult. You should take action."

That morning, Paulson had breakfast with Federal Reserve Chairman Bernanke. They exchanged views on this. Both sides expressed their intention to avoid Lehman's collapse in chaos and encourage the private sector to solve its own problems.

But at this time, Bernanke didn't understand why Paulson took such a strong stance. He guessed that the reason was that Paulson was frustrated by the bailout of Fannie and Freddie, and he didn't want to become the spokesman for bailing out Wall Street.

Next, New York Fed Chairman Geithner also said that the Fed would not provide "special credit support."

He also said to the bosses in an almost threatening tone:

"If you can't find a suitable solution, panic will spread as soon as the market opens next Monday, a local problem will turn into a catastrophe, and the entire financial system will be in danger."

The purpose of Paulson and Bernanke tightening their pockets is to force Wall Street financial giants to spend money to rescue Lehman Brothers. After all, it was you who caused the disaster.

However, the other side hopes that the Treasury Department or the Federal Reserve will take action, and some of them regard Paulson's threat as a gaming strategy.

A complex game of power and interests is getting better.

A few hours before the meeting, financial giants were not eager to express their stance. After all, they did not know Lehman's true fortune.

Next door to the conference room, Paulson appointed Goldman Sachs and Credit Suisse to form an accounting team that was evaluating Lehman's real assets.

The lawyers, auditors, and accountants of the accounting team investigated Lehman's accounts from bottom to top.

Secretary Paulson is angry at your negative attitude:

"This matter is related to the economic security of the entire United States, and I will remember those who have not contributed."

After that, the participants were asked to continue coming here for the meeting at 9 a.m. the next day.

The next morning, as Standard Chartered began final negotiations with Lehman Brothers, the accounting team released their assessment.

They believe that Lehman's current asset value should be discounted by 40%, or even lower.

This result shocked the participants, and the acquisition immediately fell into pessimism.

Bernanke even wondered whether Goldman Sachs had deliberately lowered the numbers and exaggerated the risks.

Geithner explained to Bernanke that there was a possibility that the value jointly assessed by Goldman Sachs and Credit Suisse was much lower than what Lehman Brothers claimed, making it difficult for the market to believe Lehman.

At this time, the government's idea, including Paulson and Bernanke, was to hope that Wall Street financial companies would jointly provide financial support or guarantees to assist Standard Chartered Bank or Barclays Bank in acquiring Lehman Brothers.

In the event that neither bank is willing to acquire it, a cooperative mechanism should be adopted and the power of the entire financial industry should be used to prevent Lehman Brothers from collapsing in chaos.

Just like the bailout of American Long-Term Asset Management a decade ago.

However, Bernanke ignored one fact - when they jointly rescued Long-term Asset Management ten years ago, Lehman Brothers initially wanted to make no profit, but was later forced to invest US$100 million, which was US$150 million short of its original commitment.

…

Lehman Brothers negotiators were struck by a bolt from the blue after hearing representatives from Standard Chartered Bank announce the termination of the acquisition.

Later, they learned that Standard Chartered Bank was negotiating with them at the same time as Merrill Lynch, which was also in trouble - and Merrill Lynch made Standard Chartered an "unrejectable offer."

At yesterday's meeting, neither Lehman Brothers nor Standard Chartered Bank participated. However, representatives from Merrill Lynch who participated in this meeting already understood from the attitudes of Paulson and Bernanke that the government may not act like this this time. Treat Fannie and Freddie in the same way as Bear Stearns for a "bottom-up" bailout.

In this case, for Merrill Lynch, which was in the same situation as Lehman Brothers, Standard Chartered became one of their few buyers, and they were in contact with Lehman Brothers!

You know, the entire meeting yesterday night was counting on Standard Chartered Bank to acquire Lehman Brothers. The Treasury Department and the Federal Reserve did not show any intention to rescue.

Under this situation, Merrill Lynch CEO Thain showed a strong desire to survive. He intercepted the case decisively, contacted Standard Chartered Bank urgently, and held on to the funder in a "low sale" manner.