The Wall Street Journal Friday morning reported that Lehman Brothers (LEH) in recent weeks moved $2.8 billion in loans — including some risky leveraged buyout deals — into a newly created collateralized loan obligation. And (think old Shake ‘n Bake commercials) the Fed helped! So did the credit ratings agencies, which gave the new vehicle, dubbed “Freedom,” investment-grade credit ratings. The deal, in turn, gives Lehman cash.
“It’s a creative way for banks to get liquidity from assets they don’t want to sell at fire sale prices,” said one industry exec. Others called it “brilliant.”