ALSO IN EARNINGS
- FTSE, DAX, CAC Seen Lower, Greek Deal Delayed
- Citigroup Takes $50 Million Loss in Lending Rate Probe
- Investment Banking Drags Down Barclays Profit
- The Secret Lives of Traders—Seeking the Next Hot Thing
- FBI Investigated Steve Jobs Drug Use
- Strip Greenspan of His Knighthood: SocGen Strategist
- China January Trade Surplus Soars as Imports Crumble
- Markets Finally Get Greek Deal —So Where's the Rally?
- Warren Buffett: Stocks Will Outperform Gold and Bonds
MOST SHARED
- Tesla Unveils First SUV: Model X
- Strip Greenspan of His Knighthood: SocGen Strategist
- Sony's Hirai to Extend PlayStation Strategy, Cut Costs
- India's Tata Steel Posts First Quarterly Loss in 2 Years
- China January Trade Surplus Soars as Imports Crumble
- Steelers' Antonio Brown Spends Super Bowl Week with Twitter Fan Turned BFF
- Top Five Mistakes to Avoid in Online Dating
- Jobs You Can Do Forever
- Zynga, Hasbro Partner to Make Toys, Games
- Warren Buffett: Stocks Will Outperform Gold and Bonds .. and They're Safer 'By Far'
MOST POPULAR
HOT ON FACEBOOK
Lehman Goes to the Fed's Discount Window
Text Size 
Lehman Brothers Holdings is unlikely to face the kind of liquidity crisis that brought down Bear Stearns over the weekend because of the Federal Reserve's decision to let Wall Street brokerage firms borrow directly from the central bank, CFO Erin Callan told CNBC.
"It certainly takes the question of liquidity off the table," Callan said in a live interview. "I think [the Fed's decision is] the great news that happened over the weekend."
Callan said Tuesday that Lehman [LEH
Loading...
()
], which reported better-than-expected earnings on Tuesday but has faced persistent rumors of a Bear Stearns-type liquidity crisis, plans to borrow from the Fed through the discount window.
Lehman followed up on Callan's announcement by borrowing from the window within minutes of her appearance. At 5 p.m. New York time, Lehman borrowed $2 billion, sources said -- a small amount relative to the bank's $375 billion balance sheet.
Goldman Sachs [GS
Loading...
()
] also used the discount window late Tuesday, sources said, but it wasn't clear how much money the investment bank asked for.
"It’s going to be actively used" by many brokerages, Callan said. “We’ll be a participant. It’s a great opportunity."
The Fed announced the new lending facility for Wall Street firms on Sunday night, shortly after it helped facilitate the sale of Bear Stearns [BSC
Loading...
()
] to JP Morgan Chase [JPM
Loading...
()
].
Under the plan, primary dealers -- big Wall Street firms that deal directly with the Fed in financial markets -- would be allowed to borrow directly from the Fed for at least the next six months.
The Fed, which normally lends through its discount window only to banks that take deposits, can lend to nondepository institutions under special circumstances. It last did so in the 1930s.
In the CNBC interview, Callan acknowledged that Lehman has had a difficult time recently amid all the rumors that it's in financial trouble.
"We know we're always the next name on the list," she said. “There isn’t a great appreciation for the fact that we’ve evolved our franchise dramatically over the last decade. In fact, we’ve structured our liquidity exactly for this kind of situation. So, we feel like we’re in a good spot."
However, Callan said Lehman's difficulties aren't over. “Expect to see more [writedowns] in the second quarter," she said. "Later in the year things will start to stabilize more in asset prices.”
“It feels like, at this point, the greater part of the calendar year will be rough sledding and I wouldn’t expect it to feel pretty stable until 2009.”
- Many have called to abolish the Federal Reserve. But what would happen if it was dissolved for good?
- Entrepreneurs have increasingly been buying back their companies over the last three years.
- Where are the best city locations for singles to take the online dating plunge?
- A Steelers fan spent a week with wide receiver Antonio Brown- and it was all due to tweeting.
- Here’s a look at the woman behind the newest collectible toy that kids love.
- Grab a brew—or not—and click ahead to experience the world’s most highly rated beers.
Data is a real-time snapshot *Data is delayed at least 15 minutes
