Securities Law Prof Blog

Editor: Eric C. Chaffee
Univ. of Toledo College of Law

A Member of the Law Professor Blogs Network

Friday, April 11, 2008

Lehman Borrows from Fed Creatively

Wall St. is taking advantage of its new ability to borrow from the Fed.  Lehman Brothers, for example, moved $8.2 billion in loans that it had trouble selling into a new investment vehicle "Freedom," so called because it gave the firm the freedom to tap into as much cash as it needed.  Freedom then issued debt securities backed by the loans, most of which received investment grade credit ratings.  Lehman then used the securities as collateral for a low interest short term loan from the Fed.  Was this strategy "shocking" or "brilliant?"  In any event, expect more of the same.  WSJ, How Lehman Opened the Fed's Spigot.

http://lawprofessors.typepad.com/securities/2008/04/lehman-borrows.html

News Stories | Permalink

TrackBack URL for this entry:

http://www.typepad.com/services/trackback/6a00d8341bfae553ef00e551c81b718833

Listed below are links to weblogs that reference Lehman Borrows from Fed Creatively:

Comments

It was 2.8 Billion, not 8.2 Billion you idiot.

Posted by: YouShouldStopBlogging | Apr 11, 2008 9:09:56 PM

Post a comment