Lehman Bankruptcy Attorney Miller Blames Treasury, Calls Paulson’s Book “Revisionist History”

Harvey Miller, a partner at Weil, Gotshal & Manges LLP, who guided Lehman Brothers Holdings Inc. through the biggest-ever U.S. bankruptcy, says the refusal of the U.S. Treasury to save Lehman Brothers was “a gross miscalculation” and Henry Paulson’s account of the events is “revisionist history.” Miller talks with Bloomberg’s Tom Keene and Michael McKee on Bloomberg Radio’s “Bloomberg Surveillance.”

Listen to the interesting interview on Tom Keene’s Surveillance – a deal could have been done to save Lehman. How do we know this? Well, $40 billion+ has been returned to Lehman creditors since it entered Chapter 11 bankruptcy. If the Treasury financed an orderly sale of assets like it did with Long Term Capital Management perhaps the severity of the Lehman shock wouldn’t have been as bad. Interesting, we still don’t know the full story here.

Revisiting Lehman Brothers Chapter 11 Filing Five Years Ago

Five years ago today, Lehman Brothers, one of the world’s largest investment banks, filed for Chapter 11 bankruptcy protection.

I thought this weekend would be an opportune time to revisit the report of the Examiner, Anton Valukus, chairman of accounting firm Jenner & Block.

The global financial crisis has created a non-trivial community of bloggers and commentators who write angry screeds against the financial sector, but don’t take the time to read the detailed reports like this.

There was clearly no need for TARP or giving investment banks access to the discount window. There is nothing wrong with imposing losses on shareholders, but when executives have little skin in the game because they didn’t really fork out for their equity holdings in their employers, of course there will be issues around risk taking.

The Chapter 11 documentation website shows the difference between how the US deals with corporate insolvency and how New Zealand and Australia do.

Michael West, writing in the Sydney Morning Herald, points out how the Australian arm of Lehman Brothers has paid out millions of dollars to liquidators and lawyers but nothing to creditors yet.

From an economists perspective, if you are an unsecured creditor, you now need to account for the opportunity cost of money tied up in insolvency proceedings. This means that less credit will be available, less deals will get done and the silent recovery will take a lot longer.