The Fall Of Lehman Brothers

The Fall Of Lehman Brothers
The fall of Lehman brothers was the beginning of what would be a long road to recovery, one that
we are still on in fact, the financial crisis sparked fierce debates on how the banking sector was run.
Many agreed that banks had become 'too big to fail' and that they took on risky investments without
any thought about the impact this would have on the world economy, this is because they believed
they would be bailed out by the government. The question that has been part of an endless drawn out
discussion, ever since the beginning of the crash, is whether big banks should be broken up in to
smaller more manageable sized institutions. It is something that divides people, there are many
differing opinions on how to handle the current financial situation we are surrounded by. Within this
essay, some of the key points of view from both sides of the argument will be put forward, analysing
both sides will lead the essay to conclude with whether banks should be broken up. The fact is the
largest eighty corporations in the world are all financial institutions, each of these institutions
controlling hundreds of billions, even multiple trillions worth of assets. These are what is known as
megabanks, Admati (2013) and other economists believe that they are a particularly dangerous part
of a fragile and inefficient financial system that exposes masses of money to unnecessary risk and
distorts the economy. Argument claim that making this system safer should be at the forefront of
people
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Case Study Of Barclays PLC And Lehman Brothers
The research questions have two first essential frequency method acting for designing the research
undertaking: first, to gather naturally–occurring pricing information; and second, to analyze that
data for what it Reveals about the attainment and how the end of the organization was affected base
with the acquisition. While these two fundamental methods require much elaboration and
specification on the researcher part, they are the foundation on which the analytical perspective is
material body . The following ingredient listed below are considered to be a major contribution
factor to a goodness and well researched paper
Research Objectives
The below are objective lens that will form the basis of the research question
To critically evaluate ... Show more content on Helpwriting.net ...
The issue of staff staying put option in the organization was the key fruit indicator of the success of
the consolidation of the acquisition of the patronage (Segal, 2008). A few worry was raised
regarding the fact that the integration was not processing effectively as there was an issue of staff of
the Lehman comrades who did not join Barclays or eventually joined other organizations of their
interest with lesser study load or having better working conditions while some of them just left field
the firm due to the integration process. Also Barclays was accused of not handling the integration
process effectively, which resulted in the departure of the staff from the Lehman brother's

Lehman Brothers Essay
Lehman Brothers
On September 10, 2008, Lehman Brothers announced the lowest decline as the shares dropped to
45%. It left the market value at $5.4 billion after the Korea Development Bank rejected to make an
investment deal that could rescue Lehman. The company would seek capital from other investors in
order to recover their financial situation. These efforts faltered and the situation grew more severe,
even after the US government had already saved the Bear Stearns and Fannie Mae and Freddie Mac.
Though it is less likely that the US government will keep Lehman's bailout, there should be a
resolution from the Federal Reserve System to bolster Lehman's finance so as to prevent the US
economic declination.
II Problems and ... Show more content on Helpwriting.net ...
It is likely that this time the government would not provide taxpayer funds to back up Lehman.
III Conclusions
Since the decline in stock continued, Lehman sought for solutions by selling their asset management
division, reducing dividends, and laying off employees. They also thought of splitting their
commercial mortgage assets with the new company. However, it seems as though that would not be
sufficient enough for them to recover their financial situation. Even if Lehman would sell their
whole firm to the new investor, it would be impossible without the support from the Federal Reserve
System.
However, if the US government decides to help Lehman with taxpayers' money, including those
amounts paid by Idaho citizens, this case will become a practical joke. The other investment
institution will consider that they can invest on risky business without worrying about the business
failure, since there will be money support from the government. I agreed that the government should
rescue Lehman since their collapse will have a huge effect on US economy, but utilizing taxpayers'
money is not the right way to support a personal business. Instead, the government could help
Lehman by endorsing Lehman's business deal with international firms that have sufficient funds to
rescue the collapsing business. The Idaho citizens can be assured that the US government won't

The Worst Recession Of The United States
At the end of the 20th century, it was clear that the United States national economy was on a incline.
The U.S began winning the worldwide arms race, holding 50% of the world weapons stockpile
(Taylor 10). Capitalism, the main trademark of the United States economy, spread like a wildfire
across the majority of the world (Taylor 10). To the uneducated ear, news like this sounds great; the
United States is slowly taking over the world. However, this insane growth was actually poising the
U.S. for an extreme downfall in the coming years of the early 21st century. The major downfall
would come to be known as the worst recession in our history since the infamous Great Depression.
While there are several speculated causes to the recession of 2007, one cause that stands out is the
housing bubble burst. "As the housing bubble burst and trillions of dollars ' worth of toxic
mortgages began to go bad in 2007, fear spread through the massive firms that form the heart of
Wall Street ("Meltdown")". The first repercussions of the housing bubble bursting were the floating
rumors about the investment bank, Bear Stearns. The rumors of the bank 's imminent bankruptcy
were so abundant, that they became a self fulfilling prophecy ("Meltdown"). In an attempt to save
the bank, Federal Reserve Chairman Ben Bernanke created a deal with JPMorgan ("Meltdown").
This deal stated that "the federal government would use $30 billion to cover Bear Stearns '
questionable assets tied to toxic mortgages

Lehman Brothers Case Study
Lehman Brothers Holdings, Inc. (Case 1.2)
Case Summary
When Lehman Brothers filed for bankruptcy in September 2008 it was the largest corporate filing in
our country's history. Lehman Brothers Holdings Inc. declared $639 billion in assets and $613
billion in debt (Florescu, 2017). The filing of Lehman Brothers bankruptcy created a mass panic in
the financial markets which caused an economic shockwave in both the U.S and foreign markets.
Lehman's collapse aggravated global financial markets for weeks, due to the size of the company
and its status as a major player in the United States as well as internationally (Florescu, 2017).
Lehman Brothers made massive dollar amount transactions which heightened the company's overall
net leverage ratio, which is an important metric when determining the overall financial position a
company sustains. In 2007, Lehman Brothers operating numbers were extremely encouraging to the
naked eye. The executives at Lehman Brothers however knew the company was in an extremely
vulnerable position that investors were oblivious to, which was that they had bought billions of
dollars in residential mortgage–backed securities. Management was under a great amount of
pressure to come up with a resolution for solving this problem, at the same time the U.S housing
market bubble was busting. The executives at Lehman Brothers elected to reduce the company's net
leverage ratio in a marginally unethical manner. This improvised tactic involved engaging in a large

The Financial Crisis Of 2008-2009
The financial crisis of 2008–2009 was an extremely significant event in recent history and has been
described as "perhaps the most important economic event since the Great Depression" (Gorton &
Metrick, 2012, p.g. 150). We are still experiencing the effects of the crisis today and there is a
considerable amount of literature on the subject. There has been much research into the crisis and
what caused it (Gorton and Metrick, 2012). Using some of this research both the causes and effects
of the financial crisis can be explored. This essay will discuss what happened in the months leading
up to the crisis, the causes and effects of the financial crisis and tackles some of the questions that
researchers have asked regarding the events of 2008–2009.
Mishkin (2011) discussed the idea that when analysing the causes of the financial crisis the events
should be split into two separate periods. The period occurring towards the end of 2007 and
beginning of 2008, which involved lending within subprime markets and the end of the housing
bubble, and the second occurring in September 2008, beginning with the bankruptcy of Lehman
Brothers (Mishkin, 2011, Gorton & Metrick, 2012).
Although the start of the financial crisis is thought of by most to be in September 2008, when
investment bank Lehman Brothers declared bankruptcy, some of the main contributing factors
actually occurred prior to 2008. During the early 2000's interest rates were low and as a result more
people were able to afford

Lehman Brothers Case Study
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Glossary
History of
Lehman Brothers
History of Lehman Brothers
With a special focus on recognizing the potential of promising industries and helping finance the
expansion of these enterprises, Lehman Brothers played an important part in the financial and
commercial history of the United States for more than 150 years. The history of the firm offers an
inside look at the emergence and growth of American industry and technology as well as the
establishment of the modern corporation.
Laying the Foundation Mayer Lehman, 1867. Courtesy of the Rare Book and Manuscript Library at
Columbia University.
Emanuel Lehman. Courtesy of the Rare Book and Manuscript Library at Columbia University.
In 1844, Henry Lehman immigrated from Rimpar, Germany, to Montgomery, Alabama where he
established a small shop selling groceries, dry goods, and utensils to the local cotton farmers. By
1850, his two brothers, Emanuel and Mayer, had joined him in the business, and they named it
Lehman Brothers. After Henry Lehman's death in 1855 at the age of 33, the two younger brothers
headed the firm for the next four decades. During their tenure, only family members–sons, brothers,
and cousins–were permitted as partners. This was a policy that continued until the 1920s.
Soon after its founding, Lehman Brothers evolved from a general merchandising business to a

The Collapse Of The Lehman Brothers
The global financial crisis of 2008 that reeked havoc on most of the financial institutions had them
fall into liquidation and bankruptcy. One of the most popular and most debated incident was the
failure of the Lehman Brothers. The Lehman Brothers were a leading US investment bank that was
worth $600 billion (D'Arcy). The global financial crisis prompted Lehman Brothers to close its
leading subprime lender (BNC Mortages) in 23 locations (). The closing of these locations were so
aggressive that the company filed for voluntary bankruptcy on September 15, 2008 ("Lehman
Brothers Collection"). The file for bankruptcy was needed after an unsuccessful attempt for a
government bail–out and mergers. Although this was a United States based ... Show more content on
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The company was family–oriented; the only employees were relatives. This was until the business
formed a partnership with Goldman and Sachs in the early 1900's ("Lehman Brothers Collection").
This partnership allowed the company to grow fast, and become designated to sell State bonds from
Alabama's government. This allowed Lehman Brothers to enter the financial market. The company
continued their operations in the financial market until 1975. Lehman Brothers merged with Kuhn,
Loeb and Company and became the fourth largest investment bank in the United States. Lehman
Brothers had steady growth with an increasing revenue base and their work force has increase from
8,500 to an estimated 28,000 in 1994. On September 15, 2008, Lehman Brothers Holdings, Inc.
sought Chapter 11 protection, igniting the largest bankruptcy proceeding in United States history.
Prior to this filing, in January 2008, Lehman Brothers reported record revenues of nearly $60 billion
and record earnings in excess of $4 billion for its fiscal year ending November 30, 2007 (Lehman
Brothers Quarterly Report). Their stock price was trading at record heights at $86.18 per share
(Carther). Not even eight months after the highest stock prices were being reached, the company
filed for bankruptcy. According to one source, the company had $639 billion in assets and $619
billion in debt (Carther). This was one of the largest bankruptcy filings in history, including
WorldCom and Enron. The firm was the largest

The Bankruptcy of Lehman Brothers
THE BANKRUPTCY OF LEHMAN BROTHERS
1
The Bankruptcy of Lehman Brothers: Causes of Failure & Recommendations Going Forward
Amirsaleh Azadinamin
Doctorate of Finance Candidate
March 6, 2012
Electronic copy available at: http://ssrn.com/abstract=2016892
THE BANKRUPTCY OF LEHMAN BROTHERS Abstract This paper looks at the failure of
Lehman Brothers as the biggest bankruptcy case in the US history and the events that followed. The
first part of the paper reviews factors that led to the failure and consequently the bankruptcy event.
Some of the causes leading to the crisis, namely the market for Credit Default Swaps (CDOs),
misrepresentation of financial statement, complex structure of the company, low standards, and
unethical ... Show more content on Helpwriting.net ...
This will also be discussed throughout the paper.
THE BANKRUPTCY OF LEHMAN BROTHERS Causes of the Failure There is no single cause
that led to the failure of Lehman Brothers. There were numerous causes and agents that led to the
disaster, including greedy Wall Street traders, the debt load of American households, the Fed's
action, rating agencies, and last but not least, the
4
deregulation (Morin and Maux, 2011). These factors were responsible for the crisis of credit and not
solely the failure of Lehman Brothers. Still, the market of Credit Default Swaps was one of the
biggest factors dedicating to the catastrophe, if not the biggest one as Lehman was heavily involved
in that market. In explaining the sub–prime market, Morin and Maux (2011) explain that sub–prime
loans "refer to inferior quality (sub) real estate loans whose higher risk of payment default is
countered by the bank with a higher interest rate. These mortgage loans, granted at variable

rates, were extended to American households with modest incomes" (p. 41). Morin and Maux (2011)
also discuss Lehman's involvement in that particular market as well as how Lehman caused erosion
in that market at the same time: The bank is accused of having sold Collateralized Debt Obligations
(CDOs) to its clients and taking short positions that effectively eroded the value of these

Financial Crisis And The Collapse Of The Lehman Brothers
It is almost mandatory that every company, institution, firm, organization, business or enterprise –
small or huge – has to undergo a financial crisis. Once in a while, it must find it hard to balance its
books of accounts. If the situation gets severe, then the organization may even close down. This
paper will give a detailed review of one institution –The Lehman Brothers – whose financial crisis
led to its fall (Wong & Smith, 2010). It will examine the beginning, the end, and the outcomes of the
same. In addition to that, the report will also analyze the government policies that relate to the fall of
the Lehman Brothers. In details, this paper covers the reasons for the crisis, the impact of the crisis
on financial markets and institutions, the impact on the global economy, the response to the financial
crisis (the bailout plan and the effect of it on capital markets), as well as the aftermath of the crisis
that cause the collapse of this Company. In a way, this paper connects the knowledge I gain from the
classroom to the current financial situation, to apply the concepts that I learn in this class, and to
better understand the financial system in the United States.
Rationale
The goal is to study, analyze and report findings of the recent "Financial crisis", and since the
Collapse of Lehman Brothers is one of such is, it suits this context. At the same time, it is one of the
enlisted topics that the professor asked the class to consider in handling this assignment,

History Of Lehman Brothers By Henry Lehman
History of Lehman Brothers Henry Lehman in Montgomery, Alabama established Lehman Brothers
in 1844. The company started out as a grocery store and was changed to Lehman Brothers in 1850
after Henry's two brothers; Emanuel and Mayer linked with him in the business. Soon after, Lehman
Brothers developed into a brokerage company distributing cotton. It opened offices in New York in
1858 and this gave the firm a stronger presence in the commodities trading, as well as it gave it a
foothold in the financial community. During the construction of the railway, Lehman Brothers
merged with Kuhn, Loeb & Co and became the primary financial advisors and underwriters to the
railroad industry. The company began financing emerging businesses such as airlines, oil and
electric companies. Over its long existence, American Express acquired the company, but Lehman
later broke off and started operating as an independent company until the day of its collapse
(Swedberg, 2010). Lehman Brothers was a company in the United States that operated in the
financial market before the financial crisis that occurred in the year 2008. The company was listed in
the New York Stock Exchange and its securities were publicly traded. For many years, the company
was performing well. However, a failure to manage risks appropriately led to the collapse of the
company. On September 15, 2008, Lehman Brothers, which was the fourth biggest investment bank
in the U.S, filed for Chapter 11 bankruptcy protection. At the

Lehman
Question 1:
From this case study, it showed how Lehman Brothers walked down to the end of it business.
Through Lehman Brothers' case, it reflects the ugly side of a corporate. A big recognized company
collapse due to it unsuccessful leadership management, culture and dishonesty by it people caused
the company walked down to the end of it business. There are several points showed how it gone
bankrupted. By using the ethical perspective to look at Lehman Brothers' situation, it showed that
the company being dishonest to it clients, failure in the company leadership and corporate
management are the major problems that lead to the company downfalls. As a Wall Street icon, they
disappointed the public and being irresponsible towards ... Show more content on Helpwriting.net ...
This may caused the unwillingness and disobedience of some employees in Lehman because their
opinion did not get the attention from the management, whereas only those who did their job just to
achieving their personal values and goals get good rewards from the company. They use to reward
employees with lots of money for taking risks, to encourage risk taking to earn better profit. Because
of the rewards, Employees has drive to work harder to get better money but has forgotten to put their
clients into consideration by lower down the risk and to do better and deeper analyses before taking
every move. Furthermore, in the case of Lehman Brothers, it showed a company that did not put his
people/ employees into consideration or as assets of it company. This showed when Lehman decided
to lower the medical insurance costs just to get an expense off the balance sheet, and rejected the
suggestion of a loyal consultant than has been worked sincerely 9 years with Lehman just to cover
the company's ass with some unethical decision. Moreover, the third party, Ernst & Young
aware of the use of Repo 105 by Lehman but did not voice out or report to the related association.
Being a top professional auditor firm, E&Y did not perform it professionalism to show
responsibility to it firm and try to help the unethical party to hide it true situation of it company. In
this scenario, it showed the unethical issue that always happens in the business industry, Corruption.
In my

Lehman Brothers
Research a failure that occurred at a large organization such as Tyco, Chrysler/Daimler–Benz,
Daewoo, WorldCom, or Enron. In an APA formatted paper that is no longer than 1,050 words,
describe how specific organizational behavior theories could have predicted or can explain the
failure of the company. Compare and contrast the contributions of leadership, management, and
organizational structures to the organizational failure. Lehman Brothers Holdings Inc, the fourth
largest US investment bank, succumbed to the sub prime mortgage crisis in the biggest bankruptcy
filing in history. The 158 year old firm, which survived railroad bankruptcies of the 1800s, the great
depression in the 1930s, & the collapse of long term capital management a ... Show more content on
Helpwriting.net ...
Lehman said that poor market conditions in the mortgage space "necessitated a substantial reduction
in its resources and capacity in the subprime space". At the end of August '07, Lehman had $600
billion of assets financed with just $30 billion of equity. Having so little capital meant that a 5
percent decline in assets would wipe out the value of the company, which investors saw as a real
risk due to the company's billions of dollars of mortgage securities. In 2008, Lehman faced an
unprecedented loss to the continuing subprime mortgage crisis. Lehman's loss was apparently a
result of having held on to large positions in subprime and other lower–rated mortgage tranches
when securitizing the underlying mortgages; whether Lehman did this because it was simply unable
to sell the lower–rated bonds, or made a conscious decision to hold them, is unclear. In any event,
huge losses accrued in lower–rated mortgage–backed securities throughout 2008. In the second
fiscal quarter, Lehman reported losses of $2.8 billion and was forced to sell off $6 billion in assets.
In the first half of 2008 alone, Lehman stock lost 73% of its value as the credit market continued to
tighten. In August 2008, Lehman reported that it intended to release 6% of its work force, 1,500
people, just ahead of its third–quarter–reporting deadline in September. On August 22, 2008, shares
in Lehman closed up 5% (16% for the

Lehman Brothers And The Financial Crisis
Lehman Brothers Holdings, Inc. on September 15, 2008 was the fourth– largest U.S. investment
bank, which sought Chapter 11 protection, ultimately initiating the largest bankruptcy proceeding in
history. Lehman Brothers was very successful in pursuing a high–leverage, high–risk business
model to fund its operations. Beginning in 2006, they began to invest aggressively in the real–estate
related assets, soon having significant exposures to subprime mortgages, just as the markets were
turning for the worst. Lehman Brothers employed a staff of accountants and risk professionals to
monitor its balance sheets and risks constantly. It decided to take questionable actions to stay alive
in the market. Nevertheless, they ultimately failed due to an ... Show more content on
Helpwriting.net ...
Leman's demise was mainly its significant exposure to the subprime mortgage and real estate
markets. As the markets began to slow down, a retraction was sparked for short–term loans as the
growing concerns of unknown exposures spread to other types of assets. Lehman relied on these
short–term markets to raise billions daily. Ultimately, it's inability to secure funding was their
undoing.
This overview of the case provides Lehman's background information, it's controls, performance
measures, key personnel, as well as the market and regulatory environment during the financial
crisis.
Questions:
1. How/why compliance with external controls does not ensure sufficient internal controls?
2. Do performance measures and the reporting of those measures play a role in economic crimes or
misconduct?
3. Would the activities at Lehman and E&Y be considered fraud or misconduct and why?
The Rise and Fall of Lehman Brothers
Founding and Early Years
During the mid–1800s, Henry, Emanuel, and Mayer Lehman emigrated from Germany, to
Montgomery, Alabama. In 1844, they established a small shop that sold groceries to local cotton
farmers. Often farmers paid their bills in cotton and the

Lehman Brothers
Lessons from Lehman Brothers: Will We Ever Learn? MGT 521 September 9, 2013
Introduction
Lehman Brothers financial services filed bankruptcy on September 15, 2008, in the New York
Southern District U.S. Bankruptcy Court. Resulting in an immediate 500 point drop in the Dow
Jones (Did Ernst & Young Really Assist Financial Fraud? 2011). This day became known as
''Dark Monday'' (Donaldson, 2012). This was to date, the largest bankruptcy filing in history
unleashing a "crisis of confidence that threw financial markets worldwide into turmoil, sparking the
worst crisis since the Great Depression." However this financial icon's fall is no surprise. The
bankruptcy examiner released reports saying that the ... Show more content on Helpwriting.net ...
There are executives and top managers who seek the easy way to make the most money for them,
without consideration for their shareholders who should be the priority. There will be no end to
people with varying motivations trying to gain an unfair or even illegal advantage to get more of it.
It's not unreasonable to expect companies to act ethically: this is one reason so many laws and
regulations are implemented. However, it is just difficult to find a company with a large number of
personnel to conduct themselves ethically.
Conclusion
The Lehman Brothers case is another unfortunate financial crisis. Their company affected many
shareholders and financial institutions around the world. The leadership of Lehman Brothers failed
to uphold their mission statement and the financial rewards for themselves undermine their
decision–making processes. Self–interest led them to make decisions that were extremely risky than
their own internal controls were designed to control, and top executives received high
compensations for taking such risks. It appeared that other personnel with various intentions also
made irresponsible decisions without regard to those who would be adversely affected. Their
company culture turned into "getting the biggest bang for your buck," no matter what the potential
cost of failure may be. Ethics were

The History Of Lehman Brothers
The History of Lehman Brothers
Lehman Brothers was founded by Henry Lehman, and his brothers, Emanuel and Mayer a German
immigrant in Montgomery, Alabama in 1850. Lehman Brothers gained there banking experience by
helping to intermediate funding for the emerging group of retail, industrial, and transportation giants
that were founded in the early 1900's. Lehman brothers gained popularity and became a well–known
investment bank under Robert Lehman. It was during this time that Lehman Brothers were gaining
recognition not only within US and also Internationally as Lehman brothers had started to join hands
with leading companies in underwriting securities offerings, giving financial advice and helping me
mergers acquisitions and takeovers.
Under the leadership of Peterson, Lehman brothers saw huge profits and gained recognition
worldwide and had developed offices internationally through acquisitions. They were able to operate
in three main areas of finance which were investment banking, capital markets and client services.
Lehman faced serious problems during the 1980 recession when internal conflict broke out between
the investment bankers and traders. Lehman brothers were financially sound and generated healthy
profits, the trading partners only received a small portion of the profits which they thought was
unfair towards them. Lewis L. Glucksman, a 20–year Lehman veteran and highly successful trader
with a straightforward, but engaging, style that some bankers thought

Lehman BrothersLegacy : The Rise And Fall Of Greed?
Abstract
This paper describes about a firm called Lehman Brothers and how their high–risk culture and
questionable deals contributed to their declaration of Chapter 11 bankruptcy on September 15, 2008.
Some of Lehman's main reasons to declare bankruptcy was their highly risky business model that
required it to raise billions of dollars per day to keep their operations going (Wiggins, Piontek,
Metrick, 2014, p.1). Another reason was their leadership who encouraged the risky culture of the
firm and operating an accounting device name Repo 105 to keep assets off its balance sheet so it
may appear that the firm was not borrowing that much money (Robbins, 2016, pg. 178). The firm
was able to do this because around the 2000s, there was a deregulation of the financial industry that
made it easier to do more financial projects such as proprietary trading, subprime mortgages, and
real estate market (Wiggins, et al, 2014, p.4–5). Which made the firm very successful until the
financial crises happened and Lehman was not able to secure any more funding to keep its
operations running causing it to declare bankruptcy. The rest of this paper will go into detail about
Lehman Brothers tactics on how it got rich quick from the financial market and how their actions
contributed to their downfall. Lehman Brothers' Legacy: The Rise and Fall of Greed
There are many articles online about Lehman Brothers bankruptcy and how their actions and the
housing bubble led to their demise. Though each

The Failure of Lehman Brother
Should Lehman Brothers Investment Bank
Have Been Allowed to Fail?
Name: Ran Linyan
Table of Contents
1 Introduction 3
2 Corporate profile of Lehman Brothers Bank 3
2.1 Corporate Profile and Business 4
2.1.1 History of Lehman Brothers 4
2.1.2 Lehman Brothers Investment Bank 4
2.2 Forces of Change and Competition in Lehman Brothers 4
2.2.1 Change in Lehman Brother's Business Strategy 4
2.2.2 Financial Competiveness in Lehman Brothers 5
2.3 Financial System and Bank Management Attitudes 5
2.3.1 Deregulation of United States Financial System 5
2.3.2 Bank's Lending Policies 6
2.3.3 Bank's Risk Management Attitude 6
3 Causes of Lehman Brothers Bank Failure 6
3.1. ... Show more content on Helpwriting.net ...

Before the firm became bankrupt, they had more than $275 billion in assets under management.
Furthermore, since the time the bank went public in 1994, the firm had increased net revenues over
600% from $2.73 billion to $19.2 billion and increased its employee headcount over 230% from
8,500 to almost 28,600 (Demyanyk, Y. S. and Hemert, O. V. 2008).
2.2 Forces of Change and Competition in Lehman Brothers
2.2.1 Change in Lehman Brother's Business Strategy
In 1994, Richard S. Fuld took control of Lehman Brothers as its Chief Executive Officer (CEO).
Under Fuld's aggressive leadership, the company flourished and became one of the largest
investment banks in the United States. （Crossley–Holland 2009) reported that in 1994, each
Lehman Brothers stock was averaging at $4 and by 2007 it catapulted to $82 creating a 20 fold
increase. From 1994, Lehman Brothers gradually adopted an aggressive growth business strategy by
expanding into highly complex and risky products such as Credit Default Swaps (CDS) and
Mortgage–Backed Securities (MBS). By 2007, Lehman Brothers was the biggest underwriter of
mortgage–backed securities of the U.S. real estate market.
2.2.2 Financial Competiveness in Lehman Brothers
Lehman Brothers faced stiff competition from other leading investment

Barclays Lehman Hrm Challenges
|Organizational Behaviour |
|Barclays PLS & Lehman Brothers Merger |
|Yasir Irshad |
[pic]
Executive Summary
The Human Resource Management challenges faced by the Barclays PLC after merger with Lehman
Brothers were mainly the low motivational levels of Lehman Brothers employees which were due to
demise of Lehman Brothers and merger with Barclays PLC. Another factor was of personality
differences between employees and groups of employees. They were required to have a very strong
and clear communication with all the stakeholders as communication is a tool which is of most
importance in scenario of mergers. ... Show more content on Helpwriting.net ...
This is due to unclear communication between the stakeholders of the concerned organisations.
HRM challenges
Mergers have become the way to go in the current climate of instability due to the recession. Since
more and more companies are now showing the openness and eagerness towards mergers to enhance
the business or to achieve stability, the issues associated with mergers are ever so under scrutiny
than ever before.
The human resource management issues related to mergers are categorised in two phases which are
known as Pre–Merger Phase and Post–Merger Phase. It is important for managers managing the
merger to not neglect the human resource management at any stage of the merger process. Only
through human resource management the people can be assured of the changes the merger will
bring.
In the case of merger between Barclays PLC and Lehman Brother, the main human resource
management challenges were the difference in cultures of the two organisations involved in the
merger process and also the Motivation of staff from both companies and especially those from
Lehman Brothers.
People problems are a major cause of failed mergers, and you must ensure that most if not all of the

people you want are still in place at the end of the integration period. This is best achieved by
carrying out an employee selection process whose pace and substance matches the kind of merger
involved. (Kay and Shelton[1])
The main issues faced by human resource

Lehman Brothers & Subprime Crisis
Introduction The global financial crisis that erupted in September 2008 has thrown economies
around the world into a recession. The root cause were sown in the credit boom that peaked in mid–
2007, followed by the meltdown of sub–prime mortgages and securitized products. Fannie Mae and
Freddie Mac were both taken over by the government and on September 24, 2008, Lehman Brothers
declared bankruptcy after failing to find a buyer. The fall of Lehman Brothers rattled the global
market and led to a great drop in the United States (U.S.) stock market the day after the
announcement. The sudden failure of Lehman Brothers is widely viewed as a watershed moment in
the global financial crisis of 2007 – 2009. With over $639 billion in assets and ... Show more content
on Helpwriting.net ...
With the U.S. housing boom well under way, Lehman Brothers acquired five mortgage lenders;
including subprime lender BNC Mortgage. BNC is ranked as one of the nation's top 100 mortgage
lenders and the eighth largest wholesale subprime lender (Mortgage info, 2007). BNC Mortgage, as
the subsidiary of Lehman Brothers Holdings Inc. became the biggest underwriter of U.S. bonds
backed by mortgages. As securitization of mortgages increased, the investment banks urged the
mortgage lending industry to increase their loan volumes. However, on August 22, 2007, Lehman
Brothers decided to close down its subprime–lending unit; BNC Mortgage, causing about 1,200
employees to lose their jobs (Onaran, 2007). Figure 2: The downfall of Lehman Brothers Until
2007, Lehman Brothers has generated a significant portion of its revenue through the issuance of
mortgage–backed and asset–backed securities. Lehman Brothers had grown increasingly reliant on
its fixed income trading and underwriting division which served as the primary engine for its strong
growth throughout the first half of the decade as shown in Exhibit 1 (Stowell, 2010). When the
collapse of the U.S. subprime mortgage industry started, it result in credit crisis and the mortgage
default rates began to rise and the demand for these securities began to disappear. Lehman Brothers
was left with billions of dollars of rapidly depreciating securities on its balance sheet,

Repo 105 Auditing
The summary provided details surrounding the Lehman Brothers' executives and the development of
the Repo 105 transactions utilized to improve the financial statement results, however, more
information is needed involving the auditing firm Ernst & Young (E & Y). William Schlich, the lead
auditor, was intimately involved in the accounting and auditing acceptance of the Repo 105 process
and his obstinacy with the bankruptcy examiner sheds negative light on E & Y. Schlich's
unreasonableness and obstructing the examiner from performing his duties only shows how E & Y
was intimately involved, especially when these transactions were not noted in previous audits.
Overall, the summary provided the detailed information needed to understand the intricacies ...
Show more content on Helpwriting.net ...
They are not legally bound to investigate; however, it only makes sense to investigate to ensure
there is no impropriety. This report helps the auditors to dig deeper into the information concerning
the Repo 105 transactions.
8.) E&Y is a defendant in Lehman–related lawsuits filed in both state and federal courts. Identify the
factors that influence E&Y's legal exposure between lawsuits filed in state courts versus those filed
in federal courts. Lehman Brothers executives and E & Y auditors are liable for the federal and state
suits filed depending on the materiality of their involvement. For instance, Ong & Yeung (2011)
says, "...regardless of whether technical compliance was achieved, a 'colourable' claim existed
regarding Lehman's failure to disclose its Repo 105/108 practice that rendered the firm's financial
statements materially misleading" (p. 101). Another factor identified, Ong & Yeung (2011) notes,
"...colourable claims against the officers and directors of Lehman in connection with their failure to
disclose the use of the practice and against its auditors for their failure to meet professional
standards in connection with that lack of disclosure (p. 101). Criminal and civil (federal and state for
both) charges can be brought against Lehman and E & Y. Jeffers states, "If Lehman's CEO and CFO
knew of the Repo 105 transactions and knew that

Lehman Brothers : Financial Failure
Lehman Brothers' Bankruptcy
The history of the Lehman Brothers' is prestigious and long. America's wealth owed its beginning
from the Lehman Brothers. Many companies from the US such as the Campbell Soup Company, and
American Airlines, among others, obtained a greater level of financing from the Lehman Brothers.
The Lehman Brothers had become one of the biggest investment banks on Wall Street. In 2008, the
Lehman Brothers filed the chapter 11 bankruptcy, after which its attempts to find a buyer seemed
unsuccessful.
Assess the factors that contributed to the financial failure of the firm, indicating how management
failed to manage the risk related to each factor.
A company can fail due to a number of reasons. However, the Lehman Brothers ... Show more
content on Helpwriting.net ...
The warnings of managing directors and talented researchers were not put into consideration by
these leaders.
The Board of Directors
As noted in the above context, the board of directors followed instructions from the top. They did
what Dick Fuld told them even though it was not appropriate. The company was failing in its
operations even with availability of the Risk Management Department. The board of directors knew
the irrational nature of the markets but was ignored by Dick Fuld. This reflects the lack of corporate
governance in reference with the operational risks that were evident in Lehman. In addition, Dick
Fuld was stopped at noting in his efforts to keep the stock price high. The duty of the Lehman's
board was to sign off the decisions that were made by the CEO. The CEO and the chairman were
one in the same. Fuld chaired majority of the committees and his enabled his preferences to be
considered.
The Management Team
Joseph Gregory was part of Lehman and the second in command after the CEO. He had worked
with this company for 34 years. He was noted to be a yes– man. This means that he did want the
CEO said even if it was not fit for the company. Gregory had passion for minority issues compared
with the corporate issues. He and the CEO never cared about the company even when the company
was reporting losses and the fall in stock. It is noted that Gregory was later removed from the
company and

Collapse of Lehman Brothers
Collapse of Lehman Brothers
Lehman Brothers was an investment bank that went back to the 1850s, surviving the Civil War, two
World Wars, the Great Depression and any other great misfortune that this 160 year old company's
history had gone bankrupt. Lehman brothers were an important part in the financial and commercial
industries in the United States. People may have thought that leverage was a bad thing; they should
have realized that a dry–goods store turned into a huge investment bank then years later bringing
attention to the whole world. Lehman brothers began when an immigrate by the name Henry
Lehman came from Germany and settled in Montgomery, Alabama where he started a small shop
selling groceries, dry–food and utensils to ... Show more content on Helpwriting.net ...
On September 10, Lehman announced a gloomy fiscal third–quarter of how they are financially.
They reported a loss of $3.9 billion, which had a write–down of $5.6 billion, and announced a way
to find a strategic move to fix their business. Also on September 10 Lehman Brothers had to sell off
Neuberger Berman to raise capital. Lehman had no option but to file for bankruptcy. That same day,
Moody's Investor Service said, "that they were going to review Lehman's credit ratings, and also
said that Lehman would have to sell a majority stake to a strategic partner in order to avoid a rating
downgrade". This progress led to a 42% plunge in the stock on September 11. Lehman only had $1
billion left in cash by the end of that week; they were beginning to run out of time. The weekend of
September 13 Lehman, Barclays PLC and Bank of America, aimed at assisting to takeover of
Lehman, but ended up to be unsuccessful. That Monday Lehman had to declare bankruptcy, ensuing
in the stock to plummet to 93% from its previous close on September 12.
Besides having problems with mortgage and credit problems most of Lehman's problems were
holding on to low credit tranches and holding way too long on to subprime mortgages. The second
quarter lost about $2.8 billion and they had to liquidate $6 billion in assets. Here is a

The Downfall Of Henry Lehman
INTRODUCTION In 1844, Henry Lehman moved from Rimpar, Germany, to Montgomery,
Alabama where he set up a little shop offering basic needs, dry merchandise, and utensils to the
nearby cotton ranchers. By 1850, his two siblings, Emanuel and Mayer, had gone along with him in
the business, and they named it Lehman Siblings. After Henry Lehman 's demise in 1855 at 33 years
old, the two more youthful siblings headed the firm for the following four decades. Amid their
residency, just relatives–children, siblings, and cousins–were allowed as accomplices. This was an
approach that proceeded until the 1920s. Not long after its establishing, Lehman Siblings developed
from a general promoting business to a wares expedite that purchased and sold cotton for the grower
living in and around Montgomery, Alabama. "Ruler Cotton" overwhelmed the economy of the
southern Joined States in the 1850s. As the business grew, a brief organization was framed with
cotton vendor John Wesley Durr to fabricate a cotton stockpiling stockroom, empowering Lehman
Siblings to take part in bigger deals and exchanges. A New York office was opened in 1858, giving
the firm a more grounded nearness in the items exchanging business and also a solid footing in the
budgetary group. The quick advancement of the railways changed the nation from an agrarian to a
mechanical economy in the years taking after the Common War. The blast in railroad development
brought about enormous movement on Divider Road, as

The Challenges And Failure Of The Board Of Lehman Brothers
Essential for a firm's survival and its ongoing success is effective corporate governance. Indeed,
when executed effectively, corporate governance helps to not only "prevent corporate scandals,
fraud and civil and criminal liability but also enhance a company's image in the public eye" (Sun,
2010). This, in turn, positions a firm as a self–policing institution, accountable and worthy of
shareholder and debtholder capital. Responsible for charting the strategic direction, approving
policy and ensuring that the mission statement of a firm is carried out, is the Board of Directors.
(Coastal Community , 2013) notes that "directors, also, have a responsibility to maintain the balance
between economic and social goals and between individual and collective goals, reflected through
the efficient and effective use of limited resources. The Board of Lehman Brothers is an example of
a board that failed to execute several key corporate governance responsibilities. These key
responsibilities of good corporate governance fall under four main pillars according to (In Share ) 1)
Accountability (ensure that management is accountable to the board and that the board is
accountable ... Show more content on Helpwriting.net ...
This failure is in direct violation of the corporate governance pillar of fairness as these funds where
owned by investors, as such it is the boards duty to protect the interest of its shareholders and not to
abuse they positions. The Directors of Lehman brothers failed to protect its shareholder and instead
look out for that of top executives. This manifested into the then Board of directors, removed critical
funds from the firm to pay top executives around $1 billion respectively over a period of time from
2000–2008. The Board also awarded the chairman a remuneration of estimated 500 million by
(Lehman Brother ) mere days before the firm declared

The Financial Meltdown Of 2008
The Lehman Brothers scandal is what many consider to be the catalyst that started the financial
meltdown of 2008. This paper is meant to look at what took place during the start of the meltdown
and what caused Lehman to fail. Who was involved? What caused one of the largest banking
institutions in history to fail? What could have been done differently? These are a few of the
questions I'd like to address in the next few pages. In the Fall of 2008 things were starting to look
bad for Lehman Brothers. Much of their investments were in the housing market which was
beginning to fall, and fall hard. On Friday September 12, Hank Paulson the US Treasury Secretary
under President George W. Bush, flew to New York for a meeting regarding ... Show more content
on Helpwriting.net ...
Fulds goals were essentially to "overtake rivals" like Goldman or Merrill who had been in the game
for a long time, using borrowed money was his solution to this. In 1994, right around when Dick
Fulds was appointed CEO, Lehman shares were valued at $4/share, by 2007 at Lehman 's peak,
shares were valued at a staggering $84/share. This massive growth was primarily attributed to
Lehman's expansion into other more complex investments, including credit default swaps. As
defined by Investopedia, "A credit default swap is a particular type of swap designed to transfer the
credit exposure of fixed income products between two or more parties. In a credit default swap, the
buyer of the swap makes payments to the swap's seller up until the maturity date of a contract. In
return, the seller agrees that, in the event that the debt issuer defaults or experiences another credit
event, the seller will pay the buyer the security's premium as well all interest payments that would
have been paid between that time and the security's maturity date." At the time this was seen as a
normal practice, but firms began to speculate with these swaps and this is what ultimately caused
many large financial firms like AIG to collapse. Risk was the name of the game and was how
Lehman began to operate under Fuld. It was believed that the firms creating these complicated risky
investments were distributing risk wide

The Collapse Of Lehman Brothers Holdings Inc.
1. Introduction
158–years–old institution, the Lehman Brothers Holdings, Inc., Sought chapter 11 protections on
September 15, 2008, indicating the largest bankruptcy filed in the U.S. history. The Lehman
declared $639 billion in assets and $619 billion on debts, which surpassed the previous bankruptcy
filed by WorldCom and Enron. The Lehman brother was 4th best–ranked U.S. Investment bank and
globally 7th best investment bank before the collapse. An industry that had 25,000 employees
worldwide crumbled into almost nothing within a week, which is one of the seminal event in the
global financial crisis. The Lehman Brothers' demise was a result of substantial attention to the U.S.
subprime mortgage and the real estate markets that coaxed into global financial crisis, when these
markets began to slow–down.
2. The History: Lehman Brothers Holdings Inc. early founding
German immigrant Henry, Emanuel, and Mayer Lehman founded the Lehman Brothers Holding Inc.
on 1844. They started with a small groceries shop in Montgomery, Alabama and eventually
extended their business to become a commodities broker that bought cotton from landers and sold it
to the planters in Montgomery. The cotton ruled the Southern United States economy in 1850s. As
business developed, the Lehman Brothers formed brief partnerships with that times big cotton
merchant John Wesley Durr to build warehouse to store cotton and to involve on larger trades and
sales.
For more than 150–years Lehman Brothers played

A Colossal Failure of Common Sense
1. Introduction
A Colossal Failure of Common Sense was one of many books to be published in the aftermath of the
Financial Crisis of 2007. After seeing the global economy stall in the face of massive losses in word
financial markets, many Americans sought to better understand the crisis and its causes. This book,
written from the perspective of a financial market insider, provides a glimpse into the world of
global finance and also seeks to explain how the players in this world were involved in the crisis. In
the words of the author Lawrence McDonald, "My objective in writing A Colossal Failure of
Common Sense was twofold. First, to provide ... a close–up, inside view of how markets really
work.....And, second, to give... as crystal clear an explanation as possible about the real reasons why
the legendary Lehman Brothers met with such a swift end"1. By writing about his personal
experience at Lehman Brothers and recounting stories from within the famous investment banking
firm, Mr. McDonald largely succeeds at his first goal. However, the elements of personal biography
and the chronological order of the book make it difficult for the reader to fully appreciate all of the
varied causes of the financial crash. I believe that the main value of reading this book is in
understanding these causes, with Lehman Brothers acting as a microcosm of the greater financial
universe. As such, in this review I have isolated elements from Mr. McDonald's book which
highlight how the crisis

The Downfall Of The Lehman Brothers
Part–A
On September 15, 2008, the infamous investment bank Lehman Brothers was forced to file for
Chapter 11 bankruptcy by the federal court. The firm was entangled in risky business that ultimately
led to its demise because they did not take reasonable care to avoid acts that were foreseeably
damaging to the United States economy.
Established in the United States, Henry Lehman and his brothers, Mayer and Emanuel, formed a
partnership to start a general merchandising business together naming it Lehman Brothers. Soon
after its founding, the Lehman Brothers marked their evolution by turning into a global financial
service firm. The firm grew to be a major player in the financial history of the country, rapidly
prospering to be the fourth–largest modern investment and brokerage bank corporation. The Lehman
Brothers held a policy until the 1920's that only family members were permitted to form legal
partnerships among this firm, then eventually branched off allowing other key members to be
carried into the business.
Lehman Brothers continued to develop their financial strategies and invested heavily into the
mortgage market. Once the firm became a practitioner for mortgages, the inflating housing market
became an appealing investment. Consequently, Lehman purchased five mortgage lenders one of
which included BNC Mortgage, a subprime mortgage lender. These mortgages were offered to
people who may not have the finest credit rating or the ability to carry the mortgage should rate

Lehman Brothers : Financial Crisis
Many financial entities experienced financial trouble as the housing bubble burst and mortgage–
backed securities lost significant value, specifically the investment bank Lehman Brothers. The
Lehman Brothers filed for Bankruptcy in September 2008. Before filing for bankruptcy and years
prior to the housing bubble burst, the Lehman Brothers' balance sheet was growing rapidly during
the beginning of 2006. This was mainly due to the many long–term investments financed through
short–term borrowing. These assets included a significant amount of residential and commercial
mortgage–backed securities, the same type of securities that precipitated the 2008 financial crisis.
Although the market for mortgage–backed securities was showing signs of trouble during 2007,
Lehman continued its aggressive growth expecting to benefit from the countercyclical crisis (Hines,
Kreuze, and Langsam 2011). During this time, Lehman took on more risk, ignoring its own risk
models, while also excluding some assets from their risk analyses. These assets became a lot more
difficult to sell without incurring significant losses. Lehman was able to maintain acceptable
leverage ratios through questionable accounting methods, which allowed Lehman to paint a perfect
picture of its leverage ratios and to allegedly mislead investors. A common financing tool that
Lehman frequently used, as well as other investment banks, were repurchase agreements, also
known as repos. A repurchased agreement is a

U.s. Treasury Bond Market
2. U.S. Treasury Bond Market
Yields on U.S. treasury bonds especially on the bonds with a maturity up to one year decreased
significantly between 2007 and 2009 as shown in the graph below. The one–month treasury bond
yield decreased from 4.79% in January 2009 to 0.04% in December 2009. In the beginning of 2007
bond yields were very high and therefore mortgages takers with adjustable–interest rates had high
interest payments. All this led to a high number of default and strong decrease in house prices. This
general weaker economic situation led to a decrease in Bond yields. The decrease became even
faster at the end of 2007, when the more creditworthy borrowers were also unable to repay their
mortgages. As reaction to the bad economic situation in 2008 the FED has opened its discount
window and lowered the discount rate by 1% in order to make it cheaper and easier for banks to
access money. Both lead to a further decrease in the bond yields as people had no more trust in the
products sold by investment banks and therefore looked for save ways to invest their money. One of
this save options to invest money is lending money to the U.S. government in forms of U.S. Bonds.
So the change in yields basically happened because there was a high demand for save ways to invest
money and therefore a high demand for U.S. bonds. The high demand for bonds resulted in high
prices and thus low yields.
3. Bear Stearns
The failure of Bear Stearns began in 2007 as two hedge funds managed by

Martin Shkreli's Career And His Position At Turing...
Before discussing Turing Pharmaceuticals, LLC., it is important to fully understand the history of
Martin Shkreli's career and his position at Turing Pharmaceuticals, as they have a causal
significance in the development of the scandal.
1983: Martin Shkreli was born and raised in a working class family in Brooklyn, New York.
2000: At the age of 17, Shkreli interned at the Wall Street hedge fund Cramer, Berkowitz and
Company. While interning at the hedge fund, Shkreli recommended short selling biotech stocks.
Short selling is a trading strategy that seeks to capitalize on the anticipated decline of a security.
Opportunely, the company profited, and Shkreli worked at the hedge fund until 2005.
2006: Shkreli started Elea Capital Management.
2007: The Wall Street investment bank Lehman Brothers sued Elea Capital Management for failing
to pay a put option, essentially a bet that the market would fall. Lehman Brothers won a $2.3 million
default judgment in the lawsuit. Luckily for Shkreli, Lehman Brothers collapsed from bankruptcy
before they collected on the ruling against Elea Capital Management.
2009: Shkreli launched MSMB Capital Management with his friend Marek Biestek where he
continued to short sell biotech companies and berated those companies online.
2011: In February, Shkreli founded Retrophin, a pharmaceutical company. That same month,
MSMB Capital Management made a bad bet shorting a biotech company called Orexigen
Therapeutics. MSMB lost $7 million and

The Lehman Brother's Bankruptcy
Allied Academies International Conference
page 43
THE LEHMAN BROTHER'S BANKRUPTCY: A TEST OF MARKET EFFICIENCY
Christine Pichardo, Longwood University Frank Bacon, Longwood University
ABSTRACT This study tests the market efficiency theory by examining the effect of the Lehman
Brothers bankruptcy on several brokerage firms, as well as the overall market. It would suggest that
these brokerage firms would occur negative stock prices following the announcement of the Lehman
Bankruptcy. For this study, I analyzed 15 firms' stock price's risk adjusted rate of return before and
after September 15, 2008, some with larger assets in Lehman than others. Results show stock prices
dropping approximately 24 days prior to the announcement and ... Show more content on
Helpwriting.net ...
H21: The risk adjusted return of the stock price of the sample of investment firms is significantly
negatively affected around the event date as defined by the event period This study uses the standard
risk adjusted event study methodology to test the stock market's response to the Lehman Brothers
Bankruptcy on September 15, 2008. Using Yahoo Finance, I found the historical stock prices for the
15 firms and the S&P 500 index during the event study period. The event study period involved 180
days prior to the event and 30 days after, using day 0 as the event date. Using those prices, I
calculated the holding period returns for the companies (R) and the corresponding S&P 500 index
(Rm) for each day using the formula: Current daily stock return= (current day close price – previous
day close price) previous day close price Current daily index return= (S&P current close– S&P
previous close) S&P previous close A regression analysis was then performed using the actual daily
return of each company (dependent variable) and the corresponding S&P500 index daily return
(independent variable) over the pre–event period day –180 to –31 period prior to the event period of
day –30 to day +30) to obtain the alpha (the intercept) and the beta (standardized coefficient). Table
1 shows alphas and betas for each firm.
New Orleans, 2009
Proceedings of the Academy of Accounting and Financial Studies, Volume 14, Number 1
Allied Academies International Conference Table 1 Alpha 's and

The Financial Crisis Of The Fiscal Crisis
The 2007–2008 financial crisis is seen as one of the biggest failure of risk management. This is the
reason why it has been described it as a credit tsunami.
The aim here is to look at the state in which the financial market is at the moment after being hit by
the 2007–2008 financial Crisis. The first part of this report introduces some key issues that have
affected the confidence in the banking sector and its importance in the banking sector. The second
part will provide explanations on how to restore confidence.
Confidence is very vital in the banking sector.
The 07–08 financial crisis known as credit crunch as led the confidence in the banking sector to a
dramatic fall. Evidences have been proved for example with customers redrawing their deposit form
banks like northern rock.
As mentioned by Gerard Caprio (2005), a crisis always lives citizens cautious with their savings in
the banking sector. Mistrust or lack of trust has led to the failure of banks like Northern Rock and
Lehman Brothers.
Why has confidence been dented?
Finding the way to promote confidence is very important because it will be the key to prevent or
avoid another financial crisis. A recent study has shown that bankers were making decision without
knowing the securities of treasuries they were buying. Instead of basing everything on credit
worthiness, banks were more focus on interpersonal and individual relations (Ingves, 2014).
The first problem was with the customer behaviour. Banks are

The Collapse of Lehman Brothers
On September 15, 2008, Lehman Brothers filed for bankruptcy. With $639 billion in assets and $619
billion in debt, Lehman 's bankruptcy filing was the largest in history, as its assets far surpassed
those of previous bankrupt giants such as WorldCom and Enron. Lehman was the fourth–largest
U.S. investment bank at the time of its collapse, with 25,000 employees worldwide. Lehman 's
demise also made it the largest victim, of the U.S. subprime mortgage–induced financial crisis that
swept through global financial markets in 2008. Lehman 's collapse was a seminal event that greatly
intensified the 2008 crisis and contributed to the erosion of close to $10 trillion in market
capitalization from global equity markets in October 2008, the biggest ... Show more content on
Helpwriting.net ...
Lehman 's so–called countercyclical strategy was terminated by mid–2007, as its losses and illiquid
assets were beginning to get out of control. Neither during the last quarter of 2007 nor during the
first quarter of 2008, however, did Lehman attempt to raise equity or sell of assets. During this
period, it also used an accounting trick to remove some $50 billion from its books
("Repo lOS"). By this time, Lehman 's dependence on the short–term repo market had also increased
dramatically and was nearly 26% of its liabilities or twice that of peer banks (Valukas, 2010, p.
1407).
Despite all of these failures, Fuld insists that it was rumors and short selling that brought down
Lehman, not its huge losses in a deteriorating economy and his own failure to deal with this.
"Ultimately what happened to Lehman Brothers," Fuld (2008b, p. 8) would later say when he
testified at
Congress, "was caused by a lack of confidence."
While it seems that Fuld believed that Lehman could weather any storms it faced during the spring
and summer of 2008, investors were getting increasingly nervous. While many banks had declared
heavy losses and write–downs, Lehman was not one of them. In fact,

Lehman Brothers Great Depression
Lehman Brothers was founded by German immigrant Henry Lehman and his two brothers Emanuel
and Mayer in 1850. Lehman Brothers was able to overcome many obstacles– "the railroad
bankruptcies of the 1800s, the Great Depression of the 1930s, two world wars, a capital shortage
when it was spun off by American Express in 1994, and the Long Term Capital Management
collapse and Russian debt default of 1998." (Investopedia) But the collapse of the housing market
was one obstacle they could not overcome.
During the Great Depression the Glass–Steagall Act was enacted in 1933. The legislation prevented
commercial and investment banks from competing with each other and protected their balance
sheets by having each sector focus on certain transactions. ... Show more content on Helpwriting.net
...
The firm recognized profits from 2005 to 2006, and in 2007 it reported a record net income of $4.2
billion on revenues of $19.3 billion. In the same year, Lehman Brothers' stock reached an all–time
high of $86.18 per share, giving it a market capitalization close to $60 billion." (Investopedia) The
bursting of the housing bubble was imminent. Defaults on subprime mortgages were at a seven–year
high. The stock market had its biggest single–day drop in five years on March 13. "In the post–
earnings conference call, Lehman 's chief financial officer (CFO) said that the risks posed by rising
home delinquencies were well contained and would have little impact on the firm 's earnings. He
also said that he did not foresee problems in the subprime market spreading to the rest of the
housing market or hurting the U.S. economy." (Investopedia) Bear Stearns, another investment
bank, had two hedge funds fail with the credit crisis in August. Lehman Brother's stocks fell
strongly and it shut down its BNC unit in the same month.
Lehman Brothers underwrote the most mortgage–backed securities, gaining a portfolio four times
that of its shareholders' equity at 85 billion dollars. At the end of 2007 in the fourth quarter,
Lehman's stocks rebounded. The firm however, did not take that opportunity to reduce its large
mortgage portfolio. That large portfolio coupled with its high degree of leverage at 31 made Lehman
Brothers very vulnerable to the deteriorating market conditions. In

Lehman Brothers And The Subprime Mortgage Crisis Essay
On September 15th, 2008, Lehman Brothers filed for Chapter 11 Bankruptcy, the largest filing for
bankruptcy in the history of the United States (U.S.). During this time, Lehman Brothers was the
fourth largest investment firm in the U.S. It declared $639 billion in assets and $613 billion in debts
(Wiggins, Piontek, & Metrick, 2014). They had come a long way from a general store in Alabama
back in the 1800's. This company's downfall can mostly be blamed on the subprime mortgage crisis
of 2007/2008, surely there are many other reasons though. The U.S. government did not employ any
bailout tactics for Lehman Brothers like it did for J.P. Morgan Chase. The government did let some
other firms go bankrupt, but their biggest mistake was leaving Lehman Brothers out to dry. Their
downfall had a much worse impact on the economy. It is estimated that this crisis cost the U.S.
economy (based on lost output) (goods and services not yet produced) anywhere from a couple
trillion to $10 trillion dollars (Wiggins et al., 2014). This is despite the vigorous efforts of the U.S.
government and governments from around the world to stabilize and maintain their economies.
Lehman Brothers originally started out as a general store. In 1844, Henry Lehman started the
business and eventually his two brothers, Emanuel and Mayer, joined in. What started off as selling
supplies to cotton farmers quickly turned to a commodities broker company. After the Civil War,
Lehman Brothers helped form and head the

Lehman Brothers Essay
Q1.
Lehman Brothers was the top 5 global investment banks who operated in U.S for more than 150
years providing services in Investment Banking(dealing with mergers & acquisitions), Capital
Markets(dealing with equity & fixed income products), and Client Services(dealing with private
client & private equity businesses) to corporate, government, clients & institutes having greater net
worth .
A brief history–
1. 1840– Henry Lehman migrated from Germany to Montgomery, Alabama and opened up a small
store selling dry goods & groceries which was named to Lehman Brothers in 1850 when he was
assisted by his brothers Emanuel & Mayer. Lehman's started trading cotton in exchange for money
& merchandise in 1858 & later moved to New–York. In 1887 they registered with New York Stock
Exchange marking the evolution of the business from commodities business to merchant banking
firm. In 1960 they opened office in Paris. There were emerging partnerships as it acquired Abraham
& Co. in 1975 which later merged with Kuhn, Loeb & Co. In 1984, the American Express acquired
Lehman Brothers & merged it with Shearson. The co. registered on London Stock Exchange (1986)
& Tokyo Stock Exchange (1988). Later in 1999, the co. had an alliance with Bank of Tokyo to
proceed with Japanese acquisitions. In 2002, Lincoln Capital Management's fixed income business
was acquired & bought 2 new businesses in 2003 by the name Neuberger German & The Crossroads
Group. On Sep–15, 2008– the co. was charged for chapter

Financial Analysis : Lehman Brothers Holdings Inc.
INTRODUCTION
Lehman Brothers Holdings Inc. was a worldwide monetary administrations firm. Lehman was the
fourth–biggest speculation bank in the US [behind Goldman Sachs, Merrill Lynch and Morgan
Stanley] before going into bankruptcy in 2008. Its business activities involves investment, research,
investment management, equity and fixed–income sales and trading and so on
September 15, 2008, the firm recorded for insolvency insurance after the massive collapse of about
25,000 workers, extreme misfortunes in its stock, and depreciation of its advantages. Lehman 's
liquidation recording is the biggest in US history with $639 billion in holdings and $619 billion in
obligation, as its benefits far surpassed those of past bankrupt giants example: WorldCom and
Enron. This is thought to have assumed a real part in the unfolding of the late 2000worldwide global
financial crisis. The accompanying day, Barclays reported its consent to buy Lehman 's North
American venture managing an account and exchanging divisions alongside its New York central
station building. On September 20, 2008, a reconsidered rendition of that assertion was sanction by
US Bankruptcy Court Judge James M. Peck. A week later, Nomura Holdings published that it would
gain Lehman Brothers ' establishment in the Asia–Pacific area, including Japan, Hong Kong and
Australia and additionally Lehman Brothers ' venture saving money and values organizations in
Europe and the Middle East. The arrangement got to be

The Fall Of Lehman Brothers

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The Fall Of Lehman Brothers