Lehman Brothers Financial SA (LEHNQ)

[cottonisking]

AI On September 10, 2008, JPMorgan Chase (JPMC) obtained $8.6 billion in collateral from Lehman Brothers, consisting of $1.7 billion in money-market funds and $6.9 billion in cash, according to a court filing. This occurred in the days leading up to Lehman's bankruptcy filing on September 15, 2008. Lehman's desperate attempts to meet collateral demands from JPMC and other banks contributed to its collapse, as they were unable to secure sufficient liquidity.
Here's a more detailed breakdown:
Context:
In the days before Lehman's bankruptcy, JPMorgan Chase, Lehman's main clearing bank, demanded additional collateral, primarily for derivative trades.
Collateral:
This included $1.7 billion in money-market funds and $6.9 billion in cash deposited into a demand deposit account at JPMC.
Impact:
These collateral calls, particularly those from JPMC, significantly impacted Lehman's liquidity and contributed to its inability to secure necessary funding to stay afloat.
Legal Battle:
Lehman later argued that JPMC exploited its position as a clearing bank to extract excessive collateral, but the court ultimately sided with JPMC, finding they were entitled to the collateral, according to legal updates from Thomson Reuters.
Settlement:
While Lehman and JPMC settled some outstanding claims related to the bankruptcy, the issue of the collateral demands remained a point of contention and legal dispute.