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Analyst Who Said "Buy Lehman" 20 Days Before Its Collapse Is Now On The Financial Stability Oversight Council
Seven years ago today, Lehman Brothers failed. But it is what took place just over two weeks prior that is of interest for the scope of this article.
On August 27, less than 20 days before the failure of Lehman, Morgan Stanley analyst Patrick Pinschmidt revised his forecast on Lehman's Q3 earnings from an 8 cent profit to a Q3 loss of $2.80 a share.
Patrick cautioned: "For the franchise and shares to turn the corner, we think management needs to announce a significant bulk asset sale or framework for investors to evaluate the structure or pricing of likely asset disposals."
Also he wasn't very far off when he said that "we believe a key question for investors is not the size of the writedown, but how remaining illiquid asset exposure squares with capital cushion."
And yet, despite his clear concerns about the longevity of Lehman, did the then-Morgan Stanley analyst cut his rating on Lehman? As Reuters reminds us, the answer was a resounding no:
"The analyst maintained his "overweight" rating on shares of Lehman and Goldman."
One month later Lehman did not exist, and Goldman would have followed into the abyss had it not been bailed out first by Buffett and then by the FDIC and the Fed.
Why is this episode relevant? After all virtually everyone was saying Lehman is fine and that there is no risk for the longevity of the bank, at least until the very end, when it was revealed that Goldman's alumnus at the US Treasury had decided to sacrifice Lehman (in the process eliminating Goldman's biggest fixed income trading competitor).
The answer can be found in Mr. Pinschmidt's bio:
Patrick Pinschmidt serves as the Deputy Assistant Secretary for the Financial Stability Oversight Council at the U.S. Department of Treasury. Pinschmidt also serves as the Executive Director of the Council. Prior to joining Treasury, he served as a Financial Markets Policy Advisor to the Congressional Oversight Panel on the Troubled Asset Relief Program (TARP). Previously, Pinschmidt was a sell-side equity research analyst for ten years covering financial institutions, most recently as the Senior Broker and Exchange Analyst at Morgan Stanley. Prior to joining Morgan Stanley, Pinschmidt was the Senior Online Broker and Market Structure Analyst at Merrill Lynch. Pinschmidt holds an MBA from Columbia University’s Graduate School of Business and a bachelor's degree in U.S. History and Diplomacy from Georgetown University’s School of Foreign Service.
In other words, Patrick is now one of the top-placed people in charge of the US Treasury's FSOC. Yes, the same person who 2 weeks before Lehman failed, had an "overweight" rating on the Lehman stock, is not in charge of financial stability.
Is there any doubt why nobody has any faith that without the perpetual backing of the central money printer, US capital markets can no longer exist?
h/t @ReutersJaime
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The sham continues.
Revolving door of failure... they should hire Gartman too while they are at it.
Did I say buy Lehman in 2008? I meant to say Sell.
So this puppet has a different hand up his ass!
He got it cuz Gartman turned the job down
I too have to vote for TEAM GARTMAN.
yawn... and Cramer is still on the joob toob after his Bear Stearns is fine call, not to mention "Winners of the New World, 2000"
He knew exactly what he was doing. He knew Lehman was about to fail and the stock price had to go higher. That is what a stability manager should do. It just didnt work.
Almost everybody who believed in capitalism knew LEH was about to fail. Too bad the whole house of corruption wasn't allowed to disappear so that there could be an honest reset.
By 'overweight' I meant how much larger the expense side was to the revenue.
Must be tough for Columbia U to keep topping itself. Add my man Pinschmidt to Cloward and Piven, Obama, the Weather Underground, and countless radical marxist douches.
" Is there any doubt why nobody has any faith that without the perpetual backing of the central money printer, US capital markets can no longer exist? "
Capital markets no longer exist. No more so than they did in the ole' USSR.
There . . . fixed it for them.
Corzine considers launching hedge fund after the stellar success at MF Global.
http://www.wsj.com/articles/jon-corzine-considers-launching-hedge-fund-1...
The cost for staying out of prison was a son and an undisclosed amount of money.
He still has another son to give as collateral on the next venture.
Bullshit, off with his own head!
Im with you, Laws. If this was the old days, the pre fluoride in the water days, angry lynch mobs with torches and pitch forks would be roasing this pig and feeding him to the farm animals.
Buy US treasurys.
LOL, expected, much akin to Krugman and his Nobel prize...
Truth is treason in an empire of lies.
Statist planning is the new orange...
Hey! there is only room for one of us on ZH! LOL
Statism: Ideas so good they have to be mandatory.
Fight it out.
Everyone was awestruck when Lehman went down. The analyst in question was as optimistic as Fuld was. Clearly, hindsight is 20/20 all around with the exception of Dr. Rajan, and Brooksley Born IMO. I, for one, was amazed when Lehman actually filed Chapter 11.
Financial Stability Oversight Council? You have got to be joking. Whose stability are they looking over because it sure as fuck ain't mine!
Maybe he meant "bye Lehman"?
Can't make this shit up!
"Its a crazy world"
"Somebody oughta sell tickets"
"Id buy one"
Just proves us all right, we're dealing with lower IQ individuals who have to cheat, steal and lie to make it to the top.
That describes serial killers as well.
Ted Bundy?
Lower IQ ? No
Zero conscience. Yes
They'll say and do Anything to get what they want.
Why ask "why"?... And at this point? Why not?!!!
Perhaps we should get Prince Alwaleed and Pat together for the same activity with Pat providing the line of credit to Americans "on the street"?...
At a certain age, you should retire and go away.
School of foreign service? Lot of spooks do that, no?
Reward the criminals for their crimes.
Perfect,he's a fit/sarc
This guy should be working with Cramer... in the feckin' license plate shop at Riker's Island.
AND, we'd froce them to pay for their room and board!
The bank bail-in laws are coming and they are putting all of the right pieces and players in place. "Cash" has never been riskier.
In government and wallstreet, you fail upwards.
I hope they would say: "It is what has happened since that is truly tragic."
Just BTFD on Lehman at Zero.
'
Financial Stability Oversight CouncilSounds like something out of Atlas Shrugged.
Up is down, black is white, yes is no, truth is lies, facts are fiction, conspiracy is theory, perversion is wholesome, corruption is preferable, justice is undesirable, etc. etc.
Welcome to the politically manipulated correctedness............................... the new normal
(in the process eliminating Goldman's biggest fixed income trading competitor)!!!!
Speaking on the fifth anniversary of Lehman's collapse, joint administrator and PWC insolvency partner Tony Lomas said the 3,400 creditors of the investment bank's UK and European operations should be repaid in full early in the New Year.
He also added that if a legal dispute with a small group of bondholders over £1.3 billion is decided in PWC's favour, creditors could get more than they are owed.
Which suggests that there were certainly much more bankrupt companies than Lehman.
It all makes perfect sense if one assumes that THEY wanted to cause as much damage as possible and that also explains why this guy got promoted.
As long as the SEC porn servers are up, we're all green here.
Financial Stability Oversight Council === Buy Lehman!!!
Desperate Mission: Jeb Bush Asked Mexican Billionaire Carlos Slim ...
Can you spare me a peso during Lehman burning to the ground? I'll promise to transform the telecommunications answering service to press 1 for Español or press 2 for English.
Epitaph on his tombstone (after being bumped off in a self-inflicted nail gun accident,) "Didn't see that one coming neither."
Ahemmmm...."either"
Either or... neither nor. My Mom was a tough woman
This dickweed is part of the problem. Why is he pretending to be part of the solution?
Tyler
show the zh's
the list
of all bank's
derivative's
and how oil hedging
can make the market
Dance
I will never forget in 2008 when Lehman stock was around $34.oo I wanted to short it, but I was worried that I could not manage the trade and still do my day job.
Compared to Western banksters Mugabe is a virtuous financial genius and a paragon of prudence.
Whether he is a moron or criminal or criminal moron, he seems to be in the right business.