> (whatever it means to "take control" of a multi-national company with
> significant 24x7 operations in at least 100 of the 180 or so countries
> in the world)
Good god, you're right, that would be mind-boggling!....Except that it happens all the time. Transfers of control of multinational banks with 24x7 operations: Bank of America; Wachovia; Bear Stearns. And that's just in the last year.
> the strong investment banks throughout the world will, probably in the
> course of one "market day" (which turns out to be equivalent to a
> solar day: 24 hours), pick clean all the open positions that "your"
> bank had prior to it becoming "your" bank.
Not sure what you mean here....But whatever you mean, how did Merrill Lynch prevent that from happening to BoA?
>> 2. Separate out bad assets
>
> Now they are all bad. "Your" bank is dead. See the end of Lehman for
> details[**]. When Lehman filed, they had something like $639B of
> assets and $600B of liabilities (note: not technically insolvent!); at
> last count, they continue to have ~$200B of unfunded liabilities --
> yes: that number has significantly increased since the filing because,
> well, their assets, such as they were, got picked clean.
Jordan, Lehman filed for bankruptcy. I thought we were talking about nationalization? Lehman's a mess because bankruptcy is a process that is not supposed to be applied to banks in the first place. The whole idea of nationalization is that it avoids a fire-sale liquidation.
> In addition, all of your deposits that are over the $250k FDIC
> insurance limit -- a significant portion of your balance sheet,
> because Citi has many large depositors -- are now gone, due to a run.
Wha? If you were nationalizing Citi, wouldn't you obviously want to guarantee its short-term funding? That goes for commercial paper too. It's the preferred shareholders and unsubordinated bondholders who get the haircut. Come on.
SA