Heads Roll at Lehman

Lehman CFO Erin Callan and COO Joseph Gregory are leaving their posts, replaced by Ian Lowitt and Bart McDade respectively.

MBIA and Ambac lost S&P AAA rating

Ambac and MBIA lost their crucial AAA ratings from Standard & Poor's, leaving the largest bond insurers with little ability to generate new business in future.

Downgraded to AA, not nearly far enough in my opinion.

MBIA may lose Moody's Aaa Rating

MBIA slumped 13% to $5.84 after a Moody's warning. Rival Ambac dropped 17% to $2.48. MBIA has weak new business prospects, little financial flexibility and may suffer higher losses on guarantees its main insurance subsidiary sold on mortgage-backed securities and more complex but related vehicles known as collateralized debt obligations, or CDOs, Moody's said in a statement. The agency put the Aaa ratings of MBIA's main bond insurance unit on review for a possible downgrade. The most likely outcome of the review will be a downgrade to the Aa range. But Moody's also warned that it could cut MBIA to single A.

Does anybody trust the rating agencies anymore? Is there anything in Moody's statement that wasn't true four months ago? How can MBIA and Ambac still have Aaa ratings?

Sharks (Vultures?) Circling at Lehman

Lehman Brothers (the smallest of the bulge bracket banks after Bear's demise) may not be independent for long. The WSJ reports the investment bank may be forced by its balance sheet woes and the recent plunge of its stock to sell part of even all of itself to another financial firm. Lehman shares sold off after the WSJ reported Lehman was considering a $4 billion sale of stock. Lehman shares were down as much as 15% before the firm publicly denied it had been forced to borrow from the Federal Reserve. The WSJ reports Lehman engineered part of its relief rally by buying back its own shares - an unusual move given the worries about the firm’s financial health and the company’s recent efforts to bring down its leverage ratios. Though the buyback could be taken as a sign of management’s confidence that Lehman can weather the storm, others see it as smacking of desperation.

http://dailybriefing.blogs.fortune.cnn.com/2008/06/04/lehman-on-the-block/?section=money_topstories

Wachovia CEO Ousted

Ken Thompson is retiring as CEO of Wachovia after being asked to leave by the company's board following a string of disappointing acquisitions and poor financial results.