This week the face of Wall Street changed dramatically:
All this occurred on the heels of the Treasury Department and the Federal Housing Finance Agency announcing the federal takeover of Fannie Mae and Freddie Mac, and the recent federal bailout of Bear Stearns and its acquisition by JP Morgan Chase earlier this year.
The events that have occurred over the past several weeks are unprecedented and continue to unfold on a daily basis. On Tuesday, Barclays PLC announced it would purchase substantially all of Lehman’s U.S. investment banking and capital markets business. On Wednesday, a federal bankruptcy judge gave initial approval to the Barclay’s takeover, although there is still the possibility of a competing bid. Lehman is expected to seek final court approval on Friday, September 19. Notably, news sources also have reported that Moody’s placed Barclay’s bank debt and deposit ratings under review, along with its financial strength rating. It also placed some of the bank’s subsidiaries’ ratings under review, saying that they might be cut. Moody’s is reviewing how Barclay’s ratings might be affected in view of a consummated deal.
What this means to you:
If you have a business relationship with Lehman or any of the other affected financial institutions, these events could have an immediate and direct impact on that relationship. We have been advising clients on a number of fronts including:
Pepper Hamilton’s Credit Crisis Group, established more than six months ago, has been monitoring the credit markets in general—and the Lehman Brothers situation in particular—very carefully to help clients weather these difficult times and to take the steps necessary to protect their rights. We will continue to update clients on these matters as they develop.
Should you have any questions about Lehman, AIG or the other financial institutions and/or any of your relationships with these companies, or if you have other questions about the current credit crisis, please do not hesitate to contact one of our lawyers listed.
Michael H. Friedman, Richard P. Eckman, Robert S. Hertzberg and David B. Stratton