Should The Uk Government Be Enforced By Uk Law For Achieving Financial Stability Within The Current Economic Climate?

The Multimillionaire Men of Lehman Brothers On September 15, 2008, Lehman Brothers filed for bankruptcy. With $639 billion in assets and $619 billion in debt, Lehman 's bankruptcy filing was the largest in history, as its assets far surpassed those of previous bankrupt giants such as WorldCom and Enron. Lehman was the fourth-largest U.S. investment bank at the time of its collapse, with 25,000 employees worldwide. The consequences for the world economy were extreme. Lehman’s ' fall contributed to a loss of confidence in other banks, a worldwide financial crisis and a deep recession in many countries. Lehman 's collapse roiled global financial markets for weeks, given the size of the company and its status as a major player in the U.S. and internationally. Many questioned the U.S. government 's decision to let Lehman fail, as compared to its tacit support for Bear Stearns, which was acquired by JPMorgan Chase & Co. (JPM) in March 2008. Lehman 's bankruptcy led to more than $46 billion of its market value being wiped out. Its collapse also served as the catalyst for the purchase of Merrill Lynch by Bank of America in an emergency deal that was also announced on September 15.

Many people lost as much as ten times their initial investment, which shook consumer confidence. In an effort to cover their margins, people rushed the banks in masses, demanding their money. Soon, banks began to run out of cash and went bust.

Introduction The collapse of Lehman Brothers, a sprawling global bank, in September 2008 almost brought down the world’s financial system. Considered by many economists to have been the worst financial crisis since the Great depression of the 1930s. Economist Peter Morici coined the term the “The Great Recession” to describe the period. While the causes are still being debated, many ramifications are clear and include the failure of major corporations, large declines in asset values (some estimates put the drop in the trillions of dollars range), substantial government intervention across the globe, and a significant decline in economic activity. Both regulatory and market based solutions have been proposed or executed to attempt to combat the causes and effects of the crisis.

Besides ruining many thousands of individual investors with crash, the decline in the value of assets greatly strained banks and other financial institutions as well. These places made the same big mistake the American people did before the crash, they had too much confidence and was very naive about the current state of the economy. Due to their false confidence in the economy they made an overextension of credit. Particularly the banks that held stocks in their portfolios were affected. Many banks were so confident in the newly rising economy that they irrationally gave out loans to citizens who wanted to invest in stock even when the stock was not 100% secure which became apparent during the Stock Market Crash of 1929 (Nelson). The crash of the banks did not only

There are various categories of banking; these include retail banking, directly dealing with small businesses and persons. Commercial and Corporate banking which offers services to medium and large businesses (Koch & MacDonald 2010). Private banking, deals with individuals, offering them one on one service. The last category is investment banking. These help clients to raise capital and often invest in financial markets. Most global banking institutions provide all these services combined. With all these institutions in existence within the same localities and offering similar services, there is a need to regulate the industry so as to protect the consumer and provide fair working environment for all banks (Du & Girma, 2011).

These losses necessitated governmental action in the financial markets. Companies such as Lehman Brothers and Bear Stearns lost all of their stock’s value and were forced into bankruptcy. This risk spread throughout the American banks, forcing the American government to step in and buy all of the securitized, troubled assets from the balance sheets of

1. Arguments for TBTF I. The Scope of Federal Safety Net According to Randall ‘too big to fail,’ (TBTF) policy is legal reorganization of the fragile bank so that uninsured creditors and Federal Deposit Insurance Corporation could be saved from suffering a loss. In addition, Randall argues it is necessary to extend the

Corporate and Wholesale Finance - 12BSP053 “Since 2007 to mid 2009, global financial markets and systems have been in the grip of the worst financial crisis since the depression era of the late 1920s. Major Banks in the U.S., the U.K. and Europe have collapsed and been bailed out by state aid”. (Valdez and Molyneux, 2010) Identify the main macroeconomic and microeconomic causes that resulted in the above-mentioned crisis and make an assessment of the success or otherwise of the actions taken by the U.K government to resolve the problem.

such organizations be addressed without reinstituting GlassSteagall? Or should separating ____________________ 11. Peter J. Wallison. Hidden in Plain Sight. New York, NY: Encounter Books, 2015, 17. the major functions provided by big banks into different organizations be reconsidered?12

We now going to critically assess the statement that the ring-fencing of a bank’s retail banking services from their more risky investment, wholesale and proprietary banking activities, scheduled to take place in 2018-2019, is the last and most necessary reform of the UK banking system to prevent a recurrence of a major financial crisis such as the one the occurred in 2008-2010.

The Financial Crisis of 2008: Deregulation & Corruption There has been a debate for years on what caused the Financial Crisis in 2008 and if there was one main cause, or a series of unfortunate events that led to the crisis. The crisis began when the market was no longer funding many financial entities. The Federal Reserve then lowered the federal funds rate from 5.25% to almost zero percent in December 2008. The Federal Government realized that this was not enough and decided to bail out Bear Stearns, which inhibited JP Morgan Chase to buy Bear Stearns. Unfortunately Bear Stearns was not the only financial entity that needed saving, Lehman Brothers needed help as well. Lehman Brothers was twice the size of Bear Stearns and the government could not bail them out. Lehman Brothers declared bankruptcy on September 15, 2008. Lehman Brothers bankruptcy caused the market tensions to become disastrous. The Fed then had to bail out American International Group the day after Lehman Brothers failed (Poole, 2010). Some blame poor policy making and others blame the government. The main causes of the financial crisis are the deregulation of banks and bank corruption.

Too big to fail? In this essay I will be addressing the “Too Big To Fail” (TBTF) problem in the current banking system. I will be discussing the risks associated with this policy, and the real problems behind it. I will then examine some solutions that have

2. What are the key things that are put in place when curbing risks by commercial banks?

The Financial Crisis of 2007 followed by a period of recession has had a powerful effect on the UK financial sector, which has faced a high number of job losses, pushing the amount of people employed in this sector below pre-recession levels. Alongside multiple countries, England saw a rise in unemployment to some of its highest recorded levels. However, in recent years, the employment rate has reached 75% in Sep 2017 (Clegg, 2017), which for the first time since 2008 is an increase upon the pre-recession employment rate. Within this essay I am going to analyse the current situation in the

The global financial crisis of 2008 that reeked havoc on most of the financial institutions had them fall into liquidation and bankruptcy. One of the most popular and most debated incident was the failure of the Lehman Brothers. The Lehman Brothers were a leading US investment bank that was worth