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The Week in Quotes - Lehman: any more bombs?

"The general question is: have you taken sufficient write-downs? The reason I ask is there are cases of other top management officials at other companies saying they were finished and then other quarters, they had big writedowns again." Michael Mayo, an analyst at Deutsche Bank, presses Dick Fuld, chief executive of Lehman Brothers, about the bank’s calculations of its subprime and illiquid assets during a conference call on Monday.

Fuld says he’s comfortable

"I am the one who ultimately signs off, and I’m comfortable with our valuations at the end of the second quarter." Fuld’s response. During the conference call to discuss his firm’s Q2 earnings, Fuld took full responsibility for the $2.8bn loss. "I am very disappointed in these financial results... and for me all I can say is, is, that’s just totally unacceptable. This is my responsibility. I wanted to hear a few things from me directly."

Typhoon warning from RBS

"I do not think I can be much blunter. If you have to be in credit, focus on quality, short durations, non-cyclical defensive names. Cash is the key safe haven. This is about not losing your money, and not losing your job... The very nasty period is soon to be upon us — be prepared." Bob Janjuah, head of credit strategy at Royal Bank of Scotland, sets the alarm bells ringing for investors in an email to clients on Tuesday. "The significant bearish repricing I expect to see during August/September/October will be driven by massive negative revisions to growth and stubbornly high inflation," he said, "leading to earnings deterioration, massive negative revisions to earning expectations for H2 2008 and deep into 2009, weaker and weaker credit metrics, higher and higher defaults and ongoing problems/deleveraging in the financial sector." Is that all?

Regulators’ war drums get louder

"The government cannot be put in the position of having to simply write a blank cheque when these institutions get into trouble." Federal Deposit Insurance Corp chairman Sheila Bair calls for regulation that can deal with a failing investment bank. She added that "the Fed had to invent [a procedure] on the fly" earlier this year when Bear Stearns was on its knees, and that the FDIC would not turn down the opportunity to expand its remit — currently limited to commercial banks — to investment banks if asked to do so by Congress.

Hank Paulson, US Treasury Secretary, appeared to back Bair’s plan for a formal procedure, saying she was "dead on". He added: "We must limit the perception that some institutions are either too big or too interconnected to fail. If we are to do that credibly, we must address the reality that some are.’’

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