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Follow on Google News | Financial News: ‘Cornerstone Worldwide’ – Relief Following Orderly Lehman Settlements.“Cornerstone Worldwide” – Lehman CDS contracts unwind without incident but future auctions may see turmoil return.
By: Richard Drake One of the sources said that Cornerstone Worldwide believe the 350 counterparties were able to settle in full because many liquidated holdings of equities and commodities to raise cash but with many more default auctions to come, counterparties may be out of assets to sell. The credit default swap market’s opacity has been blamed for the stubbornness demonstrated by interbank spreads which have been slow to respond to unprecedented dollar liquidity injections by the world’s central banks. Violent declines in world equity and commodity markets were largely blamed on forced-selling by banks and hedge funds trying to raise sufficient cash to meet liabilities under CDS contracts. Cornerstone Worldwide sources pointed to the forthcoming auctions for Washington Mutual and three rescued Icelandic banks as cause for concern. End
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