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BRKG: Lehman Brothers Shuts Down Subprime Unit, Fires 1,200 Employees

 
Anonymous Coward
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08/22/2007 02:42 PM
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BRKG: Lehman Brothers Shuts Down Subprime Unit, Fires 1,200 Employees
Aug. 22 (Bloomberg) -- Lehman Brothers Holdings Inc., the biggest underwriter of U.S. bonds backed by mortgages, became the first firm on Wall Street to close its subprime-lending unit and said 1,200 employees will lose their jobs.

Shuttering BNC Mortgage LLC will cut earnings by $52 million, Lehman said in a statement today. Lehman acquired Irvine, California-based BNC in 2004 and used it to expand in lending to homeowners with poor credit or heavy debt loads. The job cuts are equivalent to about 4.2 percent of Lehman's workforce of more than 28,000.

``Market conditions have necessitated a substantial reduction in resources and capacity in the subprime space,'' the New York-based firm said.

Subprime mortgages, shunned for years because of the default risk, helped fuel the U.S. housing boom this decade as securities firms led by Lehman and Bear Stearns Cos. packaged them into AAA- rated bonds. A surge in late payments on the loans has since eroded confidence in credit products and roiled global debt and stock markets as investors fled to safer assets.

Accredited Home Lenders Holding Co., a subprime specialist, announced 1,600 job cuts earlier today in an effort to outlast the credit crunch that has forced dozens of rivals out of business. HSBC Holdings Plc is eliminating 600 positions in its U.S. operations and closing a mortgage office in Indiana, and Capital One Financial Corp. is closing GreenPoint Mortgage because it can't make money anymore lending to homeowners and then selling those mortgages to investors.

3 Percent

Lehman said as recently as June that subprime mortgages and related securities provide less than 3 percent of its revenue, which was $17.6 billion last year. The firm said it will continue making home loans to borrowers with better credit through its Aurora Loan Services LLC unit.

Shares of Lehman have fallen almost 27 percent this year, the third-worst performance in the 12-member Amex Securities Broker/Dealer Index, on concern that contagion from the subprime crisis will hurt earnings. The stock fell 41 cents to $57.13 in 2:21 p.m. New York Stock Exchange composite trading today.

BNC made about $2 billion of loans in the first quarter, down 40 percent from a year earlier, according to industry newsletter National Mortgage News. The unit's 23 offices in eight states will be closed.

Lehman said in June that it would merge BNC and Aurora in within three months, eliminating 400 jobs. Aurora originated $7 billion of Alt-A loans to better-rated borrowers in the first quarter, down from $10 billion, National Mortgage News reported.

Lehman said in a regulatory filing last month that it had ``unrealized'' losses of $459 million in the quarter ended May 31 from mortgages and mortgage-backed assets. Gains in corporate bond and equity holdings, as well as derivative contracts, offset those losses, according to the filing.

[link to www.bloomberg.com]
a passing cloud

User ID: 222706
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08/22/2007 02:55 PM
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Re: BRKG: Lehman Brothers Shuts Down Subprime Unit, Fires 1,200 Employees
too little, too late?
Anonymous Coward
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08/22/2007 02:57 PM
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Re: BRKG: Lehman Brothers Shuts Down Subprime Unit, Fires 1,200 Employees
bsflag bsflag bsflag bsflag bsflag bsflag
Normal Is Subjective

User ID: 286696
Canada
08/22/2007 03:07 PM
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Re: BRKG: Lehman Brothers Shuts Down Subprime Unit, Fires 1,200 Employees
bsflag bsflag bsflag bsflag bsflag bsflag
 Quoting: Anonymous Coward 205709


You disagree or just like flags? If the former, please expound.
I thought I'd beat the inevitibility of death to death just a little bit.
Anonymous Coward
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08/22/2007 03:17 PM
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Re: BRKG: Lehman Brothers Shuts Down Subprime Unit, Fires 1,200 Employees
Why the BS flags?
Anonymous Coward
User ID: 259079
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08/22/2007 03:19 PM
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Re: BRKG: Lehman Brothers Shuts Down Subprime Unit, Fires 1,200 Employees
But, but, GW just told us the economy is fine. Nothing going on here folks, just move along....baaaaaaaaaaa
Anonymous Coward
User ID: 5174
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08/22/2007 03:20 PM
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Re: BRKG: Lehman Brothers Shuts Down Subprime Unit, Fires 1,200 Employees
TENS OF THOUSANDS OF PEOPLE LOSE THERE JOBS EVERY WEEK AND THOUSANDS OF MORTGAGE COMPANIES GO BELLY UP RIGHT AFTER A BIG FAT INFUSION OF TENS OF BILLIONS OF DOLLARS INTO THE STOCK MARKET ACCOMPANIED BY A SLASHING OF THE PRIME INTEREST RATE, HAPPENS ALL THE TIME, NOTHING TO SEE HERE, ALL IS WELL! ALL IS WELL! BUY BONDS, BUY STOCKS, REMORTGAGE THE HOUSE, GET A PLASMA SCREEN TV AND SOME OF THOSE BRIGHT SHINY SPINNING WHEEL THINGIES!

LOOK, FROM AMERICA'S NUMBER ONE HOME LENDER- TW, NO WAIT, FIVE, SCRATCH THAT, 11TH, WHATEVER.

[link to loans.countrywide.com (secure)]
Ooua nli
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08/22/2007 03:22 PM
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Re: BRKG: Lehman Brothers Shuts Down Subprime Unit, Fires 1,200 Employees
[link to www.bloomberg.com]
Anonymous Coward
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08/22/2007 03:53 PM
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Re: BRKG: Lehman Brothers Shuts Down Subprime Unit, Fires 1,200 Employees
"Lehman said in a regulatory filing last month that it had ``unrealized'' losses of $459 million in the quarter ended May 31 from mortgages and mortgage-backed assets. Gains in corporate bond and equity holdings, as well as derivative contracts, offset those losses, according to the filing."

Are they saying they had 400 million in gains since the May filing?
Anonymous Coward
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08/22/2007 03:53 PM
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Re: BRKG: Lehman Brothers Shuts Down Subprime Unit, Fires 1,200 Employees
Yeah...but the Dow is up !

weeeeeeee!
Anonymous Coward
User ID: 5804
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08/22/2007 04:12 PM
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Re: BRKG: Lehman Brothers Shuts Down Subprime Unit, Fires 1,200 Employees
Look here 5174, you need to take your medication. Yesterday I saw you calling some poor sot an asshat. Next post of yours I see, you're screaming at everyone.

Now you relax. Get some whiskey, valium, or something.
Anonymous Coward
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08/22/2007 04:12 PM
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Re: BRKG: Lehman Brothers Shuts Down Subprime Unit, Fires 1,200 Employees
Yeah, and the sky is blue !

What will all these unemployed mortgage snakes do now !

There's got to be at least 100,000 of 'em !

Be careful out there !

IATR
Anonymous Coward
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08/22/2007 04:15 PM
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Re: BRKG: Lehman Brothers Shuts Down Subprime Unit, Fires 1,200 Employees
THOSE BRIGHT SHINY SPINNING WHEEL THINGIES!

5a
Anonymous Coward
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08/22/2007 04:15 PM
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Re: BRKG: Lehman Brothers Shuts Down Subprime Unit, Fires 1,200 Employees
Yeah, and the sky is blue !

What will all these unemployed mortgage snakes do now !

There's got to be at least 100,000 of 'em !

Be careful out there !

IATR
 Quoting: Anonymous Coward 286766

You guys understand all the jobs connected to the 'mortgage snakes'???
-appraisers
-construction workers
-trades people
-Starbucks baristas
-etc etc etc.

THIS IS HUGE.
Anonymous Coward
User ID: 284179
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08/22/2007 04:17 PM
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Re: BRKG: Lehman Brothers Shuts Down Subprime Unit, Fires 1,200 Employees
FIRST MAGUS, unheard of by the public, but one of the largest RE lenders in the US closed shop. Last week. Seems they were gambling the money away, then couldnt get up enough cash to do day-to-day.

Many lost jobs and savings-and now RE apraisers in the area are not getting paid.
Circle expanding

[link to regulus2.azstarnet.com]
RHSC nli
User ID: 281712
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08/22/2007 04:19 PM
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Re: BRKG: Lehman Brothers Shuts Down Subprime Unit, Fires 1,200 Employees
You guys understand all the jobs connected to the 'mortgage snakes'???
-appraisers
-construction workers
-trades people
-Starbucks baristas
-etc etc etc.

THIS IS HUGE.
 Quoting: Anonymous Coward 257006


Yours is the understatement of the summer.
Anonymous Coward
User ID: 5804
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08/22/2007 04:21 PM
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Re: BRKG: Lehman Brothers Shuts Down Subprime Unit, Fires 1,200 Employees
You guys understand all the jobs connected to the 'mortgage snakes'???
-appraisers
-construction workers
-trades people
-Starbucks baristas
-etc etc etc.

THIS IS HUGE.


Yours is the understatement of the summer.
 Quoting: RHSC nli 281712


lol

And a first, for EAT, I might add.
Anonymous Coward
User ID: 284179
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08/22/2007 04:30 PM
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Re: BRKG: Lehman Brothers Shuts Down Subprime Unit, Fires 1,200 Employees
THE DOW IS UP BECAUSE:

ALL THE KINGS PAPER AND ALL THE KINGS MEN-COULDNT PUT THE DOW TOGETHER AGAIN-SO THEY PAPER OVER THE CRACKS AND HOLES.

AND REALLY-ALL THAT PAPER IS AS GOOD AS MONOPOLY MONEY-AND YOU WONT GET PARK PLACE EITHER!-IT WAS REPOSESSED!
Anonymous Coward
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08/22/2007 04:43 PM
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Re: BRKG: Lehman Brothers Shuts Down Subprime Unit, Fires 1,200 Employees
"....TENS OF BILLIONS OF DOLLARS INTO THE STOCK MARKET..... ALL IS WELL! ALL IS WELL! BUY BONDS, BUY STOCKS, REMORTGAGE THE HOUSE...."


the thing is, that is what the average schlub really thinks, LOL. so what is going to change that thinking? we can almost certainly rule out another 9/11, a war with iran, or economic megacrash for the next 12 months. the equations are very simple really:

dumbed down sheeple + manipulated perceptions = no panic

no panic = no DOOOOOOM

'twas a bitter pill to swallow for me, but i managed to get it down [with the help of some GEORGI].
Anonymous Coward
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08/22/2007 06:27 PM
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Re: BRKG: Lehman Brothers Shuts Down Subprime Unit, Fires 1,200 Employees
These layed off former employees are now in a stellar position to "do the jobs that (other) Americans won't do".

That won't include selling used cars however, because no self-respecting used car dealer would have them.
Anonymous Coward
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08/22/2007 07:21 PM
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Re: BRKG: Lehman Brothers Shuts Down Subprime Unit, Fires 1,200 Employees
Quayle talking about this too
MD
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08/22/2007 07:43 PM
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Re: BRKG: Lehman Brothers Shuts Down Subprime Unit, Fires 1,200 Employees
Yeah...but the Dow is up !

weeeeeeee!
 Quoting: Anonymous Coward 71498



Actually I EXPECT the DOW and other stocks to rise for a while longer. We have not only the FED pumping money in but we also have other banks pumping cash in. Take on the next factor that, YES when a company lays off a massive amounts of employees, their balance sheets look good! It ALWAYS looks good on paper which is what the wall street junkies like. The jig is up, the stock markets no longer matter. The DOW can hit 500,000,000 for all I give a fluck, but that is not going to save us now.


The DOW is nothing more than a lovely house, a mansion/palace if you will. This palace is all adorned with pure gold, the finest linens, the smoothest silks and the best wood. The problem is, the foundation of this palace is rotting rapidly below it. The foundation that underlies the stock market is failing, the real securities are corroded and rotting away. The palace WILL look good for a while longer, at least until enough of the foundation rots away. And all the while, those with a vested interest in the palace will want people to say the exact thing you just did "Yeah...but the Dow is up !" just to lure more people into investing into the actual palace a bit longer. Heck, I bet 10 to 1 most of them don't even realize the foundation is rotting away...

Mike

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