Replies to post #51602 on Lehman Brothers Financial SA (LEHNQ)

[Joe Stocks]

I wrote what Tier one capital is; A measure...

Just because you posted what Tier one capital INCLUDES, doesn't mean that it is makes it any more than a measure of a bank's financial strength.

If I said it was a cow, just because you list all the parts of a cow, doesn't mean it is any more than a cow.

[toogoodfella]

Here we go:

A trust preferred securities transaction, actually involves the issuance of three separate securities:

1. JPMs issuance of the trust preferred, or capital securities to investors
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Capital securities means it's an equity.


2. the issuance of the trust's common securities to the parent bank holding company.
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Relative amount of common stocks of JPM was issued to LBHI.


3. issuance of debentures by the parent bank holding company to the trust.
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The issued JPM common shares is a debt that must be paid by LBHI.


All three components must exist in one execution. The shares we are holding is in fact a regular preferred tied to other two transactions.

IMO, It will end up as equity if we don't get it from the asset side.