Strange, that business about Sarah Palin and the hapless Bristol. Imagine squelching rumors that your unwed teenage daughter had secretly given birth by retorting that this was impossible because said teenage daughter was pregnant at the time. Take that, rumor mill! Even the National Enquirer was left sputtering.
Still, Palin is a piker, rumor-wise, when compared with Lehman Brothers. Month after scary month, this firm has been fighting countless rumors of its imminent implosion. With recent talk of a 3Q loss that’s likely to be large, the situation has progressed from rumors to frequent press reports on the firm’s schemes to locate capital and perhaps, per Friday’s New York Times, to take a cleaver to itself and hack off the “bad” parts.
Though nicer than Bear Stearns, Lehman - unlike Ms. Palin - was never voted Miss Congeniality by its rivals. It probably doesn’t have many favors it can cash in at this point.
Lehman popped up in the tale of Thursday’s tougher-than-expected move by the European Central Bank. Thanks to abuses by some financial institutions to which it lends money, the bank will start hacking away at the valuations for asset-backed securities used as loan collateral. One of the folks fingered for “gaming the system” (in the ECB’s phrasing) is our old friend Lehman. According to the Financial Times, Lehman cleverly created "a huge collateralised loan obligation of risky buy-out debt to use at the central bank.”
While it’s not the only ECB offender (Macquarie Bank apparently used paper backed by – quelle horreur – Australian car loans), Lehman is looking like that kid in school who acts like a smartass and causes the teacher to punish the whole class. It's the kind of behavior that makes other kids unwilling to provide you with needed capital, and quite likely to spread nasty rumors about you.
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