The collapse of Lehman Brothers has bring a huge impact to the domestic economy of the United States, as well as on other economies in the world. The impact of the fall of Lehman Brothers on the economy of the United States is having the loss of investor confidence in the America economy that result in the withdrawal of their funds from the capital market.
The fall of Lehman brothers shocked the global market and led to the outbreak of the financial crisis in 2008. Then what happened to the Lehman brothers? What causes the collapse? What happened to Lehman Brothers Holdings Inc. ? As the financial derivatives become more and more popular in recent years, Lehman focused on the new system of mortgage.
The Collapse of Lehman Brothers The Lehman Brothers bank was counted as the fourth largest investment bank of US. But on Sept 15, 2008 the bank filed bankruptcy which is the largest bankruptcy filed in the world history. In this bankruptcy the Lehman assets exceeded from the earlier bankrupt giants like WorldCom and Enron.
Henry Lehman, a German immigrant, started a diminutive conventional store in 1844 and that was established in Montgomery, Alabama (Case study: The collapse of lehman brothers, n.d.). Then by 1850 Henry, Mayor, and Emanuel created Lehman Brothers the mortgage broker company (Case study: The collapse of lehman brothers, n.d.).
Lehman Brothers Holding Incorporation was a house which was globally recognised for supplying fiscal services.and filed bankruptcy protection chapter 11 ( a chapter of bankruptcy codifications in America which is avilable for every concern -sole proeritery, single or corporations and is largely used by corporate entities ) on 15-09-2008 and their aasests valued prebankruptcy were 639,066,000,800.
Lehman Brothers’ insolvency has resulted in more than 75 separate and distinct bankruptcy proceedings (PricewaterhouseCoopers, 2009). Lehman Brothers’ collapse has forced the market to reassess risk. There are many lessons learnt from the collapse of Lehman Brothers is the internal management structure of the company.
Lehman Brothers executives turned a blind eye because of the high bonuses and rewards given to them that lead to the company’s collapse. In addition, the executives were altering their financial statements to give the appearance that performance was better than it actually was while lining their own pockets.
In the second part of the essay please discuss the financial and non financial reasons behind the collapse of Lehman brothers. For example you can look at their financial statements and look at their leverage percentages or discuss their management process and you can compare their performance with other organizations during the financial crises.
The collapse of Lehman Brothers was not the result of a single lapse in ethical judgment committed by one misguided employee. It would have been nearly impossible for an isolated incident to bring the Wall Street giant to its knees, especially after it successfully withstood so many historical trials.
Once, Lehman Brothers was one of the prestigious names in the financial sector. In its heyday, it was major dealer in U.S. treasury securities, U.S. debt instruments.. Lehman Brother Collapse; Lehman Brother Collapse - Essay Example. Comments (0) Add to wishlist Delete from wishlist. Cite this document.