Last week went to show the disadvantages of being paid a high proportion of your bonus in stock, and then being locked in and unable to sell it when the price goes through the floor. Lehman bankers, who apparently own 30% of the bank's equity and are locked in for anything up to five years, saw the value of their holdings plummet 18% between Monday and Tuesday.
Lehman's tribulations were down to:
1) Suggestions that it will report a larger than expected second quarter loss, due to failed hedges.
2) Short sellers, who battered the stock in the expectation of further price falls.
(Hedge fund manager David Einhorn said shorting Lehman made sense because of discrepancies around what was said at its last conference call and what was later revealed in its 10Q filing).
3) Alleged concern from its trading counterparties about the strength of some of its derivatives units.
But by the end of the week, things were looking a little better, with shares recovering 12% of their earlier falls by Thursday. And this was all thanks to:
1) Lehman using its apparently scarce capital to buy back a few of its own shares.
4) Mike Mayo, who said buy.
The FT's Lex column pointed out that Lehman won't do a Bear Stearns while the Fed's primary dealer credit facility remains open, but noted it's due to close in September.
Monolines, meanwhile, took a turn for the worse.
Standard & Poors cut ratings for MBIA and Ambac.
The FT's Alphaville blog pointed out that $1,000bn of bonds will now lose their triple A ratings.
More writedowns may follow. UBS, Citi and Merrill are likely to be worst hit.
Barclays and RBS have 2.8bn and 3.2bn of monoline exposure respectively.
In an unprecedented move, B&B then changed the terms of its rights issue and UBS and Citi agreed to underwrite it at 55p a share, instead of 82p a share.
The saga led to concerns about the viability of other rights issues, and complaints about UBS and Citigroup's 37m underwriting fee when they didn't appear willing to do any real underwriting in this case.
The FSA said it was investigating insider trading related to B&B's plummeting share price.
Fidelity was said to be laying off 550 people in the US and elsewhere (although it pointed out it's also hiring 1,500).
Aviva said it would cut 1,800 insurance jobs.
Hiring was not extinct.
The FSA hired from Lehman, Credit Suisse and KPMG.
Collins Stewart hired an entire team of 13 people from Dresdner Kleinwort.
The New York Times said Manhattan divorce lawyers are on a roll as ladies who lunch threaten to ditch banker husbands with diminishing bonus potential.