Lehman Brothers "wind-down" loan

The Lehman Brothers “wind-down” loan

The Federal Reserve loaned Lehman $138 billion through JPMorgan Chase hours after it declared bankruptcy (and the Fed declined to bail out the firm) in order to un-wind transactions it had with other banks without severely disrupting markets. The Fed has refused comment on the loan, which was repaid in full.

Funding agency and aid type
The funding agency was the Federal Reserve Bank of New York.

Loan.

Who benefits
Wall Street banks in deals with Lehman Brothers.

Background
Prins: “In September 2008, the Fed gave JPMorgan Chase $148 billion in help the near-bankrupt Lehman Brothers.”

Marketwatch (via Prins): “At the request of [Lehman] and the Federal Reserve Bank of New York, and in order to avoid a disruption of the financial markets ... [J.P. Morgan] advanced [the money] to or for the benefit of Lehman in order to clear, and facilitate the settlement of, certain securities transactions with customers or clients of Lehman,” the filing said. The first advance was repaid Monday night, and Tuesday’s advance was made at the request of both Lehman and the New York Fed.”

Related SourceWatch articles

 * SIGTARP Quarterly Report to Congress July 21, 2009
 * Troubled Asset Relief Program