QuoteOriginally posted by: AnselmusSince the beginning of the year I told you Leh will go bust (or be merged in a hostile takeover). In June I said:"Subprime writedowns are mostly done but1) no revenue from structured products in near future2) I expect heavy lawsuits against rating agencies and i-banks - thats not discounted so far3) I expect swap curve to remain heavily inverse - that generates natural losses4) The brand Leh have suffered so far that they lose a lot business - that will continue"Aspect 4 cannot be overstated as about 50% of their funding takes place via Repo. Of course, if you are so much in the news even the most stupid guy on earth is worried about counterpart risk and reduces his exposure to Lehman. So you have some problem from the funding side (they are of course benefitting a lot from the primary dealer credit facility). However, the most important aspect is simply leverage. The public never understand how leveraged these banks are. Roughly about 25 (GS a lot less)!!! Thats crazy. And when your 5yr CDS is about 500bps plus, you are in big shit to rollover your maturing bonds. This is the core problems but most guys simply don't see it (this week I read the first time from someone official who gets it - "Citi research- Are the Brokers broken?").good pointssubprime writedowns may be almost done but alt-A and prime certainly are not.