Lehman Lying, Its Crush, and David Einhorn’s Winning

Lehman Brothers, the nation’s largest underwriter of mortgage-backed bonds, has crushed yesterday. Lehman was down 22% to $15 over rumors that Pimco, the world’s biggest bond fund, is pulling money out of Lehman.
The Banks are always lying about its liquidity. Lehman said on June 3 that it doesn’t need to raise more cash. Additionally Lehman reported $2.8 billion loss in the 2ndQ earning report on June 9 and planned to raise $6 billion in capital. It’s beyond over $300 million loss as expected by analysts. It’s David Einhorn’s Winning in Betting Lehman Collapse.

Einhorn said on March 18 that Lehman told him the changes reflect a "recategorization of certain assets" between the two levels, but it did not address specifically how it went from showing a loss of $875 million to a gain of $228 million, or about why the income statement didn't reflect that change.
But Erin Callan, the bank’s chief financial officer, explained that the level-three assets during the conference call isn't even mathematically correct.

$38.8 billion + $1.8 billion + $1.1 billion - $875 million = $40.9 billion, not $38.7 billion.

She declined to comment on the discrepancies between the call and the filing, or on any of Einhorn's other arguments. They Both had been involved in a battle.

David Einhorn, hedge fund manager, and Erin Callan, Lehman's C.F.O-Photo by portfolio.com.

Let’s review back to several days before Bear Stearns Collapse on March 14.

• A Citi’s Analyst said on March 8 that Lehman has ample liquidity to run its business.
• Bear Stearns’s CEO said on March 10, “Bear Stearns’s balance sheet, liquidity and capital remain strong”.
• Jim Cramer said via CNBC’s Mad Money on March 11, “No! No! No! Bear Stearns is not in trouble. If anything, they’re more likely to be taken over. Don’t move your money from Bear.”
• Bear Stearns’s shares were close at $30 on Friday, March 14 and its CEO said, “Our liquidity position in the last 24 hours had significantly deteriorated. We took this important step to restore confidence in us in the marketplace, strengthen our liquidity and allow us to continue normal operations”. Furthermore, Bear Stearns’s shares were opened at $2 on Monday, March 16.

It’s all a series of Banks Lying about their liquidity.






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