Global Financial Crisis : The Fall Of Lehman Brothers

1250 Words Nov 26th, 2015 5 Pages
Global banks indeed play crucial roles in keeping the global economic growth in track. The fall of Lehman Brothers in 2008 as the major factor for the economic downturns leading to the Global Financial Crisis, or 2008 financial crisis, proves this point. Started from the irresponsible handling of mortgages of consumers, the prices of houses in America sank. Interest rates fell while capital ratios became lax. It was a case of impending Great Depression. Given its role of lending funds and providing technical assistance, IMF extended its help to adversely affected countries of the 2008 financial crisis. When the crisis escalated, a new short-term lending facility (SLF) was launched with an initial budget of $100 million to fund the economies of Brazil, Korea, Mexico and Singapore that were heavily damaged by the collapse (Truman, 2009). The creation of this program allowed these emerging economies to recover from the shock and sustain the other financial institutions in these countries. If the IMF did not adjust its borrowing arrangements, these countries may not be performing very well as they are today. Meanwhile, for the remaining member countries, the IMF also extended its dollar credit so much that the amount they lent doubled that year. Meanwhile, since IMF also hold deliberative forums, the organization suggested economic stimulus programs that would spike growth. Countries that are capable of carrying additional foreign debt were encouraged to increase their debt…
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