The Collapse of Lehman Brothers

The Collapse of Lehman Brothers

Ahmad Sweed

SSU – BU502

Abstract

Lehman Brothers just had a bankruptcy on September-15-2008 . With $639 billion in assets and $619 billion in debt, Lehman's bankruptcy was the Main event by that time it was the Worst in History, as its assets was more than all other bankrupt for  giants companies such as WorldCom and Enron. It was the largest fourth company for Investment banking in the US with 25,000 employees around the World.

Lehman's demise the CEO of the company made it the largest victim of the U.S. subprime mortgage-induced the US  financial crisis that lead to the global financial markets back in 2008. Lehman's collapse was a seminal event that greatly intensified the 2008 crisis and lead to  close og $10 trillion in market capitalization from global equity markets in October 2008, the biggest monthly decline on record at the time.

As the credit crisis started at 2007 with the go down of the Two biggest funds, Lehman's stock decreased very fast . During that month, the company stopped about  2,500 of mortgage related jobs and stopped its BNC unit.Also  it closed offices of Alt-A lender Aurora in three states. Even as the correction in the U.S. housing market gained momentum, this company continued to be one of the  major players within the market. In 2007, Lehman added more security for the mortgage than any other company, adding an $85 billion dollars of portfolio, which is  four times its shareholders' equity In the last quarter of 2007.

Summary

By the time the 2008 crisis Lehman company had one of the most breakdown of the entire history.

Lehman's collapse was one of the most involved within thr global financial markets for multiple weeks, because of multiple factors: size of company, status and it was major player in the US and Internationally. Multiple question were asked about why the US let this company fail without help it. Lehman's bankruptcy led to more than $46 billion of its market value being collapse . Its collapse lead to catalyst for the buying  of Merrill Lynch by Bank of America in an emergency deal that  announced on September 15.