flahute

Ever wanted to know what causes a major investment bank to go belly-up?

On January 29, 2008, Lehman Brothers Holdings Inc. (“LBHI”) reported record revenues of nearly $60 billion and record earnings in excess of $4 billion for its fiscal year ending November 30, 2007. During January 2008, Lehman’s stock traded as high as $65.73 per share and averaged in the high to mid‐fifties, implying a market capitalization of over $30 billion. Less than eight months later, on September 12, 2008, Lehman’s stock closed under $4, a decline of nearly 95% from its January 2008 value. On September 15, 2008, LBHI sought Chapter 11 protection, in the largest bankruptcy proceeding ever filed.

There are many reasons Lehman failed, and the responsibility is shared. Lehman was more the consequence than the cause of a deteriorating economic climate. Lehman’s financial plight, and the consequences to Lehman’s creditors and shareholders, was exacerbated by Lehman executives, whose conduct ranged from serious but non‐culpable errors of business judgment to actionable balance sheet manipulation; by the investment bank business model, which rewarded excessive risk taking and leverage; and by Government agencies, who by their own admission might better have anticipated or mitigated the outcome.

via Lehman Brothers Holdings Inc. Chapter 11 Proceedings Examiner’s Report, Volume 1 (Introduction), page 2 (page 45 of the PDF file)

The report goes on to blame other banks, specifically Citigroup and JPMorgan Chase, with “colorable actions” (meaning that Lehman bond and shareholders and other adversely affected parties may now start lining up in court)

… in connection with modifications of guaranty agreements and demands for collateral in the final days of Lehman’s existence. The demands for collateral by Lehman’s Lenders had direct impact on Lehman’s liquidity pool; Lehman’s available liquidity is central to the question of why Lehman failed.

So, essentially, Lehman owed Citi and Chase money; and Citi and Chase demanded that loans be modified and/or that Lehman provide the banks with increased collateral backing the loans to protect themselves, in the process, driving Lehman out of business. Presumably the “colorable actions” will depend on whether these loan modifications and collateral demands will be found abusive or predatory. Clearly, the examiner who wrote the report feels that they are, but it is ultimately up to the courts to decide.

Now, I haven’t read the entire 2200 page report … just the Introduction and Executive Summary, but it many ways, it reads like a thriller … it will be interesting to see how this plays out over the next few months/years.

RHAPSODY

No one says it
anymore, my darling,
not to the green leaves
in March, not to the stars
backing up each night, certainly
not in the nest
of rapture, who
in the beginning was
an owl, rustling
just after silence, whose
very presence drew
a mob of birds–flickers,
finches, chickadees, five cardinals
to a tree–the way a word
excites its meanings. Who
cooks for you, it calls, Who looks
for you? Sheaf of feathers, chief
of bone, the owl stands
upon the branch, but does he
understand it, think my revel,
my banquet, my tumult,
delight? The Irish have a word
for what can’t be
replaced: mavourneen, my
darling, second cousin once
removed of memory, what is not
forgotten, as truth was
defined by the Greeks.
It’s the names
on the stones in the cemetery
that ring out like rungs
on a ladder or the past
tense of bells: Nathaniel Joy,
Elizabeth Joy, Amos
Joy and Wilder Joy,
and it all comes down
to the conclusion
of the cardinal: pretty, pretty, pretty
pretty—but pretty what?
In her strip search
of scripture, St. Teresa
was seized, my darling, rapt
amid the chatter
and flutter of well-coiffed
words, the owl
in the shagbark hickory,
and all the attending dangers
like physicians
of the heard.

  — Angie Estes, published in Voice-Over, copyright © 2002. Reprinted without permission.

Great news on the sponsorship front for some major races in the United States.

Pepsi sponsorship saves Tour of Battenkill

The United States of America was close to losing the UCI-sanctioned Tour of Battenkill when its former sponsor pulled its funding two months ago, but organizer Dieter Drake has found a replacement in PepsiCo that will allow the event to continue as scheduled in Cambridge, New York on April 18.

“I approached them back in January after we lost our presenting sponsor from last year during the Christmas holiday," Drake said. "With some persistence, they were receptive to talking about it. Selling a bicycle race is not an easy task but with a large, multi-billion dollar company like Pepsi it worked out.”

Without a replacement for previous sponsor, Malta-based GlobalFoundaries, Drake would have been forced to cancel the UCI professional men’s race, and the Pro/Am events held the weekend prior.

via Pepsi Sponsorship Saves Tour Of Battenkill | Cyclingnews.com.

And in an event that’s a bit closer to my heart, it looks like Zions Bank is returning as presenting sponsor of the Tour, with an expanded commitment to the race.

Tour of Utah steaming ahead

In what is perhaps a sign that the economy is improving, several major races have announced recently that they had secured major sponsors and are confidently approaching their scheduled launch.

The latest is the Tour of Utah, whose organizers announced Monday that all their 2009 sponsors are continuing this year, and that the race is adding a new title sponsor, Zions Bank.

The event, to be held August 17-22,will include a prologue and five stages, concluding with its toughest stage, the Park City to Snowbird Ski and Summer Resort.

The other stages include the University of Utah Health Care Ogden to Research Park road race, the Heiden Davidson Orthopedics criterium in downtown Park City, a time trial at Miller Motorsports Park sponsored by teamgive.org, and the XANGO Thanksgiving Point to Top of Mt. Nebo road race. Race route details will be announced soon.

via VeloNews.com – Tour of Utah steaming ahead.

As the VeloNews article notes, news like this really can be viewed as a sign that the economy is starting to improve, as advertising budgets start to open up again and businesses start to look for less traditional avenues for exposure.

Hopefully, this means not only the return of some other major races (like the Tour of Georgia), but also more money for teams and riders.

Of course, I also hope it means more money for employees of corporations as well. It sure would be nice to get a raise this year, since my salary has been frozen since December 2007 while my cost-of-living has increased over the few years (and rather abruptly so this past week).

“Buddha can’t be avoided. Buddha is everywhere. Enlightenment possibilities are all over the place. Whether you’re going to get married tomorrow, whether you’re going to die tomorrow, whatever you may feel, that familiar awake quality is everywhere, all the time. From this point of view, everything is a footprint of Buddha, anything that goes on, whether we regard it as sublime or ridiculous. Everything we do — breathing, farting, getting mosquito bites, having fantastic ideas about reality, thinking clever thoughts, flushing the toilet — whatever occurs is a footprint.” — Chögyam Trungpa (1939 – 1987), Tibetan Buddhist teacher.

After 5 years and 6 days, I got rid of my Isuzu Trooper this past Friday evening. It’s had a number of problems over the past year, and it just go to the point where I was tired of throwing money at it, just to keep it running. After replacing the brakes last summer and replacing the clutch this past fall the Trooper lasted long enough to take me on a road trip to Phoenix, LA and back again over the winter holidays, but now it was starting to lag and jerk, not just when cold, but even when accelerating on the freeway.

The problem could have been one of three things … a problem with the fuel system, a problem with the engine, or a problem with the transmission. I didn’t want to know which, knowing that each problem would be progressively more expensive.

So Friday night, I took the Trooper over to State Street to one of the used car dealerships, and traded it in for a new-to-me 2006 Jeep Liberty in excellent condition and a $12,000 car loan (and accompanying car payments).

So far, I’m digging the Jeep. Even it it isn’t as sexy as the Subaru Impreza I also test-drove … it still has enough zip to make it fun to drive, and like the Trooper, has enough room for skis or bikes inside; it should also get slightly better gas mileage than the Trooper.

So now we say goodbye to the Trooper Tales category, and welcome the Jeep Chronicles. Pics later.

THEY

I wondered what had
happened to the chords.
There was a music,

have a time, each
one in his place, an
endless arrival.

  — Robert Creeley (1926 – 2005), American poet.

Burke Swindlehurst racing at Callville Bay Classic. Photo copyright © Brian Hodes/VeloImages, linked from VeloNews.com

After a long career on the road, facing all the ups and downs that come with riding for a professional cycling team, Burke Swindlehurst has now entered a new phase … as a privateer both on the road and dirt; but a privateer with a cause, riding for TeamGive, an organization which works to increase awareness of, and raise funds for, research, treatment, and support of those suffering neurological disease, including Metachromatic Leukodystrophy (MLD) and similar debilitating diseases. He debuted his new one man “team” at the Callville Bay Classic, on the shores of Lake Mead, outside Las Vegas, Nevada.

Burke is a perfect ambassador to represent TeamGive. He is one of Utah’s most widely recognized professional cyclists; he truly loves his profession; and in my experience, unlike many professional athletes, he is incredibly friendly and humble.

Not only did he know who I was before I ever actually met him (and I’m just a cycling fan with a keyboard), and has never failed to say “hi” when I’ve seen him out on the road (generally going in the opposite direction and/or much faster than I am), but he has incredible taste in music. As much as he loves cycling, I think he may love music even more.

Yeah, I sound like a fanboy, but there’s nothing wrong with that. I can honestly say that Burke is one of the coolest people I know.

I am truly looking forward to following his results this year, cheering him on to the stage win at Snowbird during this year’s Tour of Utah, and being able to raise a glass and toast him for a job well done at the end of the season.