Lehman Brothers : Financial Failure

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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…
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
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