The Caused and Effects of Lehman Brothers Bankruptcy
The caused and effects of Lehman Brothers bankruptcy.
Lehman Brothers was founded in 1850 and it is a diversified investment bank provided financial services for global companies, institutions, governments and investors. Lehman Brothers was one of the most powerful stock and bond underwriters and dealers in the world, and it also as the fourth largest investment bank in the United States before. Because of widely recognized to Lehman’s operational capacity, the company had many world-renowned companies as its customer base such as Dell, Fujitsu, IBM, Intel, Philip Morris, Shell and Wal-Mart [1]. Lehman Brothers had faced four collapses before it bankruptcy, one was the stock market crash of 1929, second it had interest rate loss of $6.7 million in 1973, and then because of Lehman’s internal conflict led to be merger and acquisitions by American Express in 1984, and last one was shortage of funds in 1994. Richard Fuld as Lehman’s CEO from 1993, he led to Lehman Brothers grow up and avoid those four collapses. Even Lehman Brothers was turned the corner in these four collapses; it still declared bankruptcy as a result of $613 billion total debt in 2008 [7].
Lehman Brothers went to collapse make lots of impacts on financial markets, the most important reason caused Lehman bankruptcy is under the subprime mortgage crisis and complex financial markets. Before the subprime mortgage crisis of 2007, the U.S. real estate market over the leveraged financing and oil price was increase rapidly, many people in the excessive lending. However, Lehman Brothers had continued business of mortgage bond until the outbreak of subprime mortgage crisis in 2006, Lehman’s asset management, economic services, mergers and securities underwriting business accounted for Lehman's operating income of 40% [2]. In 2008, because the subprime mortgage crisis spread to Lehman Brothers, the company suffered a serious hit from the financial losses and caused that stock price fell to only a few
Lehman Brothers was founded in 1850 and it is a diversified investment bank provided financial services for global companies, institutions, governments and investors. Lehman Brothers was one of the most powerful stock and bond underwriters and dealers in the world, and it also as the fourth largest investment bank in the United States before. Because of widely recognized to Lehman’s operational capacity, the company had many world-renowned companies as its customer base such as Dell, Fujitsu, IBM, Intel, Philip Morris, Shell and Wal-Mart [1]. Lehman Brothers had faced four collapses before it bankruptcy, one was the stock market crash of 1929, second it had interest rate loss of $6.7 million in 1973, and then because of Lehman’s internal conflict led to be merger and acquisitions by American Express in 1984, and last one was shortage of funds in 1994. Richard Fuld as Lehman’s CEO from 1993, he led to Lehman Brothers grow up and avoid those four collapses. Even Lehman Brothers was turned the corner in these four collapses; it still declared bankruptcy as a result of $613 billion total debt in 2008 [7].
Lehman Brothers went to collapse make lots of impacts on financial markets, the most important reason caused Lehman bankruptcy is under the subprime mortgage crisis and complex financial markets. Before the subprime mortgage crisis of 2007, the U.S. real estate market over the leveraged financing and oil price was increase rapidly, many people in the excessive lending. However, Lehman Brothers had continued business of mortgage bond until the outbreak of subprime mortgage crisis in 2006, Lehman’s asset management, economic services, mergers and securities underwriting business accounted for Lehman's operating income of 40% [2]. In 2008, because the subprime mortgage crisis spread to Lehman Brothers, the company suffered a serious hit from the financial losses and caused that stock price fell to only a few
References: [9] Lehman Brothers: The last empire of wealth. (December 6, 2011). Retrieved from http://www.stockmarkettoday.cc/lehman-brothers-the-last-empire-of-wealth.html [10] What Happens To Options During Bankruptcy [11] Hedge funds post biggest losses since Lehman. (June 2010). Retrieved from http://connection.ebscohost.com/c/articles/52970726/hedge-funds-post-biggest-losses-since-lehman