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the collapse of the U.S. housing market ultimately brought Lehman Brothers to its knees, as its headlong rush into the subprime mortgage market proved to be a disastrous step
The modem Lehman Brothers (with distant origin in a dry goods business that was begun in Alabama in 1847) assumed the functions of an investment bank some 50 years later (e.g., McDonald & Robinson, 2009; Tibman, 2009). In 1994, it was spun off from American Express, and Richard Fuld, who had joined Lehman in 1969, was appointed its President and CEO. Lehman did well under Fuld's leadership, and by 2006, it had some $700 billion in assets and liabilities and around $25 billion in capital. Its assets were mainly long term and its liabilities short term. It financed itself by borrowing from tens of billions of dollars to hundreds of billion dollars on a daily basis in the short-term repo market. As any investment bank, Lehman was as a...