Lehman gives seclend losses lower priority; heightens importance of OLA

According to Reuters, Lehman Brothers Holdings said that “holders of guarantee claims from securities lending agreements don’t qualify as senior claims.” This means that outstanding securities lending claims against Lehman subsidiaries will receive less money than current senior claims. The full article is here.

Where would the FDIC have put Lehman’s securities lending claims following a takeover under the new Orderly Liquidation Authority? Probably in a good bridge company, which would have made these claimants whole. Looks like Dodd-Frank has some good parts after all.

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