It's a business decision. Just like homeowners walking away from their house that they are underwater. Now we'll find out if a Material Adverse Clause applies when you are raising capital for an Investment Bank.
In buyouts, the private equity shops cited MAC's if they blew their nose out of the wrong nostril.
When the CFO and COO are forced out, that's material.
What will happen here to the buyers of Lehman's paper? We'll soon see.
I'll bet the MAC turns on Lehman's stock price!
But traders should cover their Lehman shorts.
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