Lehman Brothers fall

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How did Lehman Brothers fall & the adverse effect on economy

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  • - Alt-A loans (made to borrowers without full documentation).
  • - Alt-A loans (made to borrowers without full documentation).
  • NET change in Cash : 278 for 3 months ending , (-773) for 6 months ending
  • Lehman Brothers fall

    1. 1. The Weekend That Changed Wall Street<br />Presented By – RohanPopli<br />Rohit Seth<br />RohitYadav<br /> Sameer Kalra <br />
    2. 2.
    3. 3. Fact File <br /><ul><li> In 2003 and 2004 Lehman acquired five mortgage lenders, including subprime lender BNC Mortgage and Aurora Loan Services, which specialized in Alt-A loans.
    4. 4. In 2007, Lehman underwrote more mortgage-backed securities than any other firm, accumulating an $85-billion portfolio, or four times its shareholders' equity which was $ 21 billion.
    5. 5. Lehman's high degree of leverage - the ratio of total assets to shareholders equity was 31.
    6. 6. On September 10, The firm reported a loss of $3.9 billion, including a write-down of $5.6 billion, and also announced a sweeping strategic restructuring of its businesses.
    7. 7. September 15, Lehman declared bankruptcy leading more than $46 billion of its market value wiped out.
    8. 8. It had a bank debt of $613 billion, $155 billion in bond debt, and assets worth $639 billion.
    9. 9. Lehman's collapse 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.</li></li></ul><li>The Whole Cycle<br />House Bubble<br />
    10. 10. Conditions on Takeovers<br />
    11. 11. Income Side Fall <br />
    12. 12. Cash Flow Side Fall <br />
    13. 13. Lehman Takeovers<br />North America<br />Asia Division<br />
    14. 14. Collapse and Commercial Paper Market <br />
    15. 15. Lehman Brothers and Commercial Paper Market Freeze<br />- U.S. policy makers meet<br /><ul><li>Real Estate plummeting in value
    16. 16. Bailout ruled out
    17. 17. Barclays and Bank of America takeover abandon. </li></li></ul><li>Lehman Brothers and Commercial Paper Market Freeze<br />-Lehman files bankruptcy . <br /><ul><li>Client start to pull the money market fund.
    18. 18. Reserve Primary , holder of $785 million in Lehman commercial paper.
    19. 19. Yield rising overnight.
    20. 20. Client withdraw 60% from within a day. </li></li></ul><li>Lehman Brothers and Commercial Paper Market Freeze<br />-U.S. Treasury announces a $50 billion temporary guarantee for money market funds.<br />-Yields came down for first time .<br />- Federal Reserve help to raise fund for satisfying withdrawal. <br />
    21. 21. Lehman Brothers and Commercial Paper Market Freeze<br />-House Representatives rejects the $700 billion Troubled Asser Relief Program (TARP).<br />- Yield surge most in more than a decade.<br />
    22. 22. Lehman Brothers and Commercial Paper Market Freeze<br />-House Representatives approves the $700 billion Troubled Asser Relief Program (TARP).<br />
    23. 23. Lehman Brothers and Commercial Paper Market Freeze<br />-Companies not able to find buyer.<br />- Federal to create special fund to invest itself.<br />
    24. 24. Lehman Brothers and Commercial Paper Market Freeze<br />-Buying begins directly from companies , example GE.<br />-Market grows for the first time. <br />
    25. 25. Lehman Brothers and Commercial Paper Market Freeze<br />-Recession results companies in need for cash.<br />-Market shrinks for 16th straight week. <br />
    26. 26. Collapse and Stock Market<br />
    27. 27. Dow Jones Industrial Average<br />
    28. 28.
    29. 29. HANG SENG INDEX<br />
    30. 30. NIFTY Index <br />
    31. 31. Top 10 Bankruptcy <br />
    32. 32.
    33. 33. THANK YOU ! <br />

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