The Collapse Of The Lehman Brothers

1638 WordsApr 27, 20177 Pages
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 $600 billion (D’Arcy). The global financial crisis prompted Lehman Brothers to close its leading subprime lender (BNC Mortages) in 23 locations (). The closing of these locations were so aggressive that the company filed for voluntary bankruptcy on September 15, 2008 (“Lehman Brothers Collection”). The file for bankruptcy was needed after an unsuccessful attempt for a government bail-out and mergers. Although this was a United States based…show more content…
The company was family-oriented; the only employees were relatives. This was until the business formed a partnership with Goldman and Sachs in the early 1900’s (“Lehman Brothers Collection”). This partnership allowed the company to grow fast, and become designated to sell State bonds from Alabama’s government. This allowed Lehman Brothers to enter the financial market. The company continued their operations in the financial market until 1975. Lehman Brothers merged with Kuhn, Loeb and Company and became the fourth largest investment bank in the United States. Lehman Brothers had steady growth with an increasing revenue base and their work force has increase from 8,500 to an estimated 28,000 in 1994. On September 15, 2008, Lehman Brothers Holdings, Inc. sought Chapter 11 protection, igniting the largest bankruptcy proceeding in United States history. Prior to this filing, in January 2008, Lehman Brothers reported record revenues of nearly $60 billion and record earnings in excess of $4 billion for its fiscal year ending November 30, 2007 (Lehman Brothers Quarterly Report). Their stock price was trading at record heights at $86.18 per share (Carther). Not even eight months after the highest stock prices were being reached, the company filed for bankruptcy. According to one source, the company had $639 billion in assets and $619 billion in debt (Carther). This was one of the largest bankruptcy filings in history, including WorldCom and Enron. The firm was the largest
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