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NEW YORK, Sept 16 (Reuters) - The Federal Reserve Bank of New York took the unusual step of providing some $87 billion in financing to units of bankrupt Lehman Brothers Holdings Inc LEH.N to prevent disruption in trading markets as customers flee, according to a filing on Tuesday.
JPMorgan Chase & Co JPM.N advanced $87 billion to Lehman on Monday to help clear and facilitate securities transactions with customers and clients of Lehman "to avoid disruption of financial markets," according to documents filed in U.S. Bankruptcy Court for the Southern District of New York.
The New York Fed then repaid the advance, according to filings. A Fed representative declined to comment.
Lehman’s holding company filed for bankruptcy on Monday, and although its broker-dealer units are not covered under the bankruptcy filing, customers typically unwind trades with a dealer whose holding company is bankrupt.
On Tuesday, at the request of Lehman and the New York Fed, JPMorgan advanced $51 billion to Lehman as part of a so-called second day advance. Court documents did not specify whether the New York Fed will repay the second amount.
JPMorgan may elect to advance additional money to Lehman units as part of a ‘post-petition advance.” (Reporting by Chelsea Emery and Dan Wilchins; additional reporting by Glenn Somerville; editing by Jeffrey Benkoe)
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