Skip to search.

Is BP the Next Lehman Brothers?

Posted Jun 17, 2010 12:18pm EDT by Peter Gorenstein in Investing, Banking
Related: bp, xle, bac, xlf, ^dji, ^gspc, FAZ

Not only has the BP oil leak created the worst the environmental disaster in U.S. history, it also has the potential to trigger another financial crisis.

“In a finance-based, derivative-laced global economy, a pelican flapping his oil-soaked wings in the Gulf could have profound implications on the other side of our interconnected world,” writes Minyanville CEO and founder Todd Harrison in a recent column.

BP shareholders have obviously taken a hit with the stock sinking about 45% since the Deepwater Horizon went down on April 20, killing 11 workers. “Across the board everybody has a piece of this pie,” he says, referring to the large stake in BP held by institutions around the world.

The stock price is only one concern. Talking with Aaron this morning, Todd observes the charts of BP credit look “similar to the way Lehman Brothers credit traded” before it collapsed in 2008.

Harrison also notes BP also has a substantial trading operation that could endanger the rest of the energy markets. “You have to respect the counterparty risk, the dominoes that could eventually topple if BP continues to trade lower.”

We’ve already seen signs of worry in the markets, earlier this week Bank of America told its traders not to enter into trades with BP past June 2011.

Is that the first domino to fall? Time will tell but it’s certainly a legitimate question.

Go to Tech Ticker

There are no comments yet

Post a comment

Sign in to post a comment, or Sign up for a free account.
Quotes delayed, except where indicated otherwise. Delay times are 15 mins for NASDAQ, NYSE and Amex. See also delay times for other exchanges.

Quotes and other information supplied by independent providers identified on the Yahoo! Finance partner page. Quotes are updated automatically, but will be turned off after 25 minutes of inactivity. Quotes are delayed at least 15 minutes for NASDAQ, NYSE and Amex. See also delay times for other exchanges. Real-Time continuous streaming quotes are available through our premium service. You may turn streaming quotes on or off. Fundamental company data provided by Capital IQ. Financials data provided by Edgar Online. Historical chart data and daily updates provided by Commodity Systems, Inc. (CSI). International historical chart data, daily updates, fund summary, fund performance, dividend data and Morningstar Index data provided by Morningstar, Inc. Analyst estimates data provided by Thomson Financial Network. All data provided by Thomson Financial Network is based solely upon research information provided by third party analysts. Yahoo! has not reviewed, and in no way endorses the validity of such data. Yahoo! and ThomsonFN shall not be liable for any actions taken in reliance thereon. All information provided "as is" for informational purposes only, not intended for trading purposes or advice. Neither Yahoo! nor any of independent providers is liable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein. By accessing the Yahoo! site, you agree not to redistribute the information found therein.