Lehman bros

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Lehman bros

  1. 1. LEHMAN BROTHERS Presented By....... Rajesh Bhagade (08) Amrin Khan (17) Deepali Magadum (27) Mary Rayan (37) Shaikh M Jahir (47) Wandrick Maruf (58)
  2. 2. Content <ul><li>Introduction </li></ul><ul><li>History </li></ul><ul><li>Sub prime Crisis </li></ul><ul><li>Bankruptcy </li></ul><ul><li>Quick Look At Lehman Chronology </li></ul><ul><li>Lessons From Collapse </li></ul><ul><li>Conclusion </li></ul>
  3. 3. Introduction <ul><li>Founded in 1850 </li></ul><ul><li>Founders : Henry Lehman </li></ul><ul><li> Emanuel Lehman </li></ul><ul><li> Mayer Lehman </li></ul><ul><li>Global financial service firm </li></ul><ul><li>The U.S. Treasury securities market </li></ul>
  4. 4. <ul><li>History </li></ul><ul><li>In layman terms What do we mean by Sub Prime Crisis </li></ul>
  5. 5. Why Did Lehman Brother Collapsed? In short, Other bank refuses to trade with Lehman. Without the ability to trade, and without investor prepared to bet on its long-term viability, Lehman Effectively had no Business
  6. 6. Why Would the other Banks not traded? <ul><li>on 15 September 2008: </li></ul><ul><li>Q3 2007: 1.1% growth </li></ul><ul><li>Q4 2007: 0.9% growth </li></ul><ul><li>Q1 2008: 0.6% growth </li></ul><ul><li>Q2 2008: 0.4% growth </li></ul><ul><li>Q3 2008: 0.1% growth </li></ul>
  7. 7. US government bail-outs <ul><li>The cost of US government bail-outs so far, </li></ul><ul><li>according to Forbes: </li></ul><ul><li>Bear Sterns: $US29 billion </li></ul><ul><li>AIG: $US144 billion and rising </li></ul><ul><li>Fannie Mae: $US100 billion </li></ul><ul><li>Freddie Mac: $US100 billion </li></ul><ul><li>Wall Street: $US700 billion </li></ul><ul><li>Car industry: $US200 billion so far </li></ul><ul><li>IndyMac: $US8 billion </li></ul>Would The US Government have stepped in?
  8. 8. <ul><li>What's going on at AIG? </li></ul>
  9. 9. WASHINGTON MUTUAL <ul><li>Who's next? </li></ul>
  10. 10. SHALLOW RECESSION <ul><li>Will it make a recession worse? </li></ul>
  11. 11. QUICK LOOK AT THE LEHMAN CHRONOLOGY <ul><li>Sept 15, 2008: Lehman Bros filed for bankruptcy sending the Dow plummeting 504 points. </li></ul><ul><li>Sept 17: the Dow falls 449 points in reaction to AIG bailout . </li></ul>
  12. 12. <ul><li>Oct 3:the House passes Financial Rescue Plan (TARP) The Dow falls 818 points. </li></ul><ul><li>Oct 7:the Fed creates the Commercial Paper Funding Facility to backstop the commercial paper market. </li></ul><ul><li>Two weeks later, Bernanke announces the Money Market Investor Funding Facility to make loans of longer maturities. </li></ul><ul><li>Sept 29:the Dow tumbles 777 points after House votes &quot;No&quot; on TARP. </li></ul>
  13. 13. Lessons from collapse of Lehman brothers <ul><li>Incentives Matter </li></ul><ul><li>Borrowers with no equity in their properties are more likely to default </li></ul><ul><li>Loan officers and brokers focused on volume get maximization </li></ul><ul><li>Fragility in financial institution </li></ul><ul><li>Financial institution proves to fragile to handle stress </li></ul>
  14. 14. <ul><li>Its really hard for democracy to make big changes </li></ul><ul><li>US & other economy fails in the process of decoupling </li></ul><ul><li>Need of regulatory reforms </li></ul><ul><li>Street name or firm name </li></ul><ul><li>Rehypothication or pawning </li></ul>
  15. 15. <ul><li>Street Name or Firm Name </li></ul><ul><li>Rehypothication or Pawning </li></ul><ul><li>Derivatives </li></ul><ul><li>False safety valves of SIPC (Securities Investor’s Protection Corporation) and Excess SIPC. </li></ul>
  16. 16. CONCLUSION <ul><li>ANALYSIS………… </li></ul>

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