A Lehman Story

It's clear now that the European and Asian operations of Lehman Brothers will be liquidated and not sold as a going concern. Barclays clearly doesn't want them, and at this point they're like bread or fish: getting staler and less appetizing by the hour.

Here's the story I'm hearing: at the end of every trading day, the Asian and European operations would remit their (very large) cash float back to Lehman Brothers in New York. That makes sense: it helped to strengthen the New York trading operations during a time when the cash would otherwise be sitting unused. Then, come the weekend, they'd get their cash float back, and continue operations.

Except, last Sunday night, before he declared bankruptcy, Dick Fuld decided that Lehman's Asian and European operations would not get their cash back. Instead, it stayed in the US -- where it was bought as part of the Lehman US operations by Barclays.

Maybe all this was necessary, like some kind of medical emergency triage where only one of the triplets can be saved, and you have to put all of your resources into that one. But it's still easy to see how the Lehman operations in Europe and Asia would be extremely unhappy about it. After all, they weren't the ones who loaded up on dodgy residential and commercial real-estate assets -- to the contrary, they were making lots of money, for themselves and for their parent.

But they're now all unemployed, thanks to a bunch of fixed-income cowboys in New York who took on too much risk. It's a very sad story. And if I were Dick Fuld, I'd be hesitant about showing my face in certain quarters of London any time soon.