Bear and Lehman were badly run. Under intense competitive pressure they made high-risk bets on some of the worst parts of the mortgage securitization business. But they were not exceptional. Merrill Lynch too had huge real estate exposure, and it was funding $194 billion of its balance sheet on a short-term basis in the summer of 2008.20 In total, prior to the Lehman bankruptcy, $2.5 trillion in collateral was posted in the triparty segment of the repo market alone on a daily basis. This gigantic pile of claims and counterclaims could become destabilized in a matter of hours. Market analysts
...more
Woof
