Saturday, September 13, 2008

Maybe even Goldman Sachs isn't big enough cushion the fall of Lehman Brothers by itself.

From The Financial Times of Sep 14:

Christopher Flowers, a former Goldman Sachs partner who is close to BofA, manages about $3.2bn of CIC’s money in a fund dedicated to taking stakes in financial institutions.

Looks like they need some reinforcements. Good thing they have these not-so-distant cousins at CIC (The China Investment Company) in the Rolodex.
The FT piece reiterates the same lineup for the spoils that has been circulating for a couple of days:

Bank of America is seen as the leading candidate to buy Lehman. It is considering a possible joint takeover bid with JC Flowers, the financial investor, and China Investment Co, the Chinese sovereign wealth fund.

Recall that BofA earlier absorbed soon-to-implode Countrywide Credit, and authored the study that became the inspiration for the Mortgage Protection Act, discussed a bit more at the link.
Lehman Bros, as seen by Wall Street.
I'm not sure which former GS partner runs JC Flowers (or if he's related to Christopher), but given how "in the loop" they seem to be whenever a legacy Wall Street bank fails, they sure are on someone's "A" list.

With connections like these, who needs a government bailout?

And incidentally, we don't see this as a bad thing, necessarily. Conspiracy theorists will foam at the mouth while sharing their suspicions about Goldman, The Fed, and the perils of forsaking the gold standard. And granted, there may be grains of truth that can be spun into compelling plots of financial sci-fi.

Before they go too far with their tales of peril, however, they should consider the wisdom of having a Goldman Sachs office in Beijing, which is drowning in dollars and owns about a 20% of foreign-owned US debt -- second only to Japan.

Who's afraid of sovereign wealth funds? If the local Goldman branch happens to answer affectionately to the name "China Investment Corp," no matter, as long as it's "dedicated to taking stakes in financial institutions" and the reigns are held by someone who speaks the same language as Treasury, aka Hank Paulson, former Goldman CEO.

The bottom line as we see it is this: If you don't have an "A Team" when times get're screwed.


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