LEHMAN

BROTHERS
BANKRUPTCY
 LEHMAN BROTHER
– A prominent investment bank
amid big banking giants of the united
states, went on to capitalize on the US
housing boom.
– Was the country’s fourth-largest
investment bank, with some 25,000
employees worldwide. But it began as
a humble dry goods store founded by
german immigrant Henry
– After Henry’s brothers Emanuel
and Mayer joined him in 1850, the
business became known as
Lehman Brothers.
 Fuld, the investment firm began to
expand its offerings in the aftermath of
the 1999 repeal of the Glass-Steagall Act,
which had barred affiliations between
commercial banks and investment banks
and their activities.

– Lehman Brothers increased its

involvement in proprietary trading (or
trading with the firm’s own money to
make a profit for itself), securitization,
derivatives, asset management and
 A TIMELINE OF THE
DECADE-OLD CRISIS AT
DEFUNCT WALL STREET
GIANT: LEHMAN BROTHERS
FEBRUAR
Y 2007
 Lehman brothers share
price touched a record
high of $86. At that time,
Lehman Brothers’ stock
market value or market
capitalization was at $60
billion
AUGUST
2007
Following the closure
of BNC mortgage,
Lehman Brothers
slashed about 1,200
jobs.
SEPTEMBE
R 2007
Lehman Brothers
reported its first
quarterly loss in
five years.
JANUARY
2008
 Lehman Brothers
announced that it will
cut another 1,300 jobs
and will halt mortgage
lending in the US.
MARCH
2008
 Standard and Poor’s, put
Lehman Brothers on negative
outlook, largely because of the
diminished capital market
activities. The arch-rival of
Lehman Brothers, Bear Stearns
collapsed and was later sold to
JP Morgan for as low as $2 per
APRIL
2008
 Lehman Brothers
took about $1.8
billion of assets onto
its books after
bailing out 5 short-
term debt funds.
MAY
2008
 Lehman
Brothers
slashed another
1,500 jobs.
JUNE 2008
 Following the end of Bear
Stearns,
Lehman brothers went on to
raise $6 billion.
JULY
2008
 Reported to be
considering turning
the bank private
August
2008
 looking for a potential buyer.
Lehman Brothers called Lazard. Fuld
started negotiating to offload $30
billion in several illiquid assets
and commercial mortgage
securities. Temasek, HSBC, Korean
Development Bank and several other
Chinese Banks looked upon the
potential deal. But all the
SEPTEMBE
R 11,
Moody’s said that
it will reduce
Lehman Brothers
rating.
 Early-
Septembe
 After talks with the Korean
Development Bank failed, Lehman
Brothers share price fell. Losses
were rising on Lehman Brothers. US
treasury secretary and ex-Goldman
Sachs CEO Henry Paulson said that
there would be no bail out for
Lehman Brothers. They also looked at
avenues such as splitting itself into
SEPTEMBE
R 10,
 Lehman Brothers reported a
loss of $3.9 billion to $30
billion of physical assets into
a separate public entity and sell
off $4 billion of real estate
assets to BlackRock. Lehman
Brothers share price dropped to
a 52-week low of $6.93 while
SEPTEMBE
R 13,
emergency meeting with the
chiefs of wall street and the
SEC to discuss any potential
solution. The CEO’s of big
investment banks such as
Goldman Sachs, JP Morgan
Chase, Morgan Stanley,
Citigroup and Wells Fargo
SEPTEMBE
R 14,
 Lehman brothers
chairman Richard Fuld was
hoping for a revival but
the ongoing negotiations
with bank of America and
Barclays went down after
SEPTEMBE
R 15,
The D-day! The 158-year-old
Lehman Brothers filed for
bankruptcy. Equity index
immediately crashed 4%, the
biggest single-day drop since
9/11 terrorist attacks.
  
Lehman Brothers filed for
chapter 11 bankruptcy
protection. Lehman
Brothers had assets
worth $639 billion.
 Lehman’s collapse sent financial
markets into uproar for weeks,
leading many to question the
federal government’s decision to let
the bank fail. Over an estimated 6
million jobs were lost and
unemployment rose 10%.
Additionally, as consequence of the
2008 financial crisis, the Dodd-
Frank Act was implemented to help
Lehman's bankruptcy filing
was the largest in history,
as its assets far
surpassed those of
previous bankrupt giants
such as Worldcom and
Enron.