The making of Lehman-aid

As the old saying goes, when handed a lemon, make lemon-aid, and, today the holders of those toxic Lehman swaps settled up and took their licks.

Lehman's massive debt swaps settle smoothly

"The liquidation process for forward open commitments involving Lehman has been completed," said the Fixed Income Clearing Corporation, a unit of the Depository Trust & Clearing Corp., in a notice on its Web site.

It said it was "pleased to announce that no loss allocations will be imposed on [mortgage-backed securities division] member firms as a result of the liquidations of these forward trades."

The overall size of the payout was expected to be as much as $400 billion. But if the counterparties' offsetting trades are taken into account, the Depository Trust and Clearing Corp. had forecast that sellers of the protection may only have to cough up about $6 billion.

"It looks as though there was no major fallout from the settlement to member firms," said analysts at Action Economics.

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