Lehman Brothers
DeVry University Keller Graduate School of Management Sherman Oaks, California
Lehman Brothers - what went wrong?
Submitted in Partial Fulfillment of the Course Requirements for Organizational Behavior MGMT591 Summer B 2012 Professor Milford
INTRODUCTION
The organization that I have selected for my final project is Lehman Brothers, I do not have any stake in the company, but I am very curious and interested in the company. I want to find out how did one of the biggest and most successful companies in the world fall apart.
Lehman Brothers was a very large global financial services firm founded in 1850 in Montgomery, Alabama. They were the fourth largest investment bank in the United States. The firm also was in business for equity and fixed-income sales, and trading, research, investment management, private banking, and private equity. The company employed about 26,200 employees.
Lehman Brothers had survived several economic hardships such as the railroad bankruptcies of the 1800s, the Great Depression of 1930, both World Wars, a capital shortage when it spun off by American Express in 1994, and also the capital management collapse and Russian debt default of 1998. However, the firms handling of subprime mortgages in the U.S housing market brought the company down to its knees.
Many blame Lehman Brothers as the prime culprit of the U.S housing boom in 2003 as they acquired five mortgage lenders. Among those five, was subprime lender BNC Mortgage. It was this acquisition along with Aurora Loan Services, which specialized in Alt-A Loans, would be the root cause of the massive cracks that emerged in the U.S housing market.
Lehman’s Chief Financial Officer stated that risks posed to the housing market were under control and would have little impact on earnings. He also stated that he did not foresee problems in the subprime market that would spill over or impact the economy or the rest of the housing market. He was
Lehman Brothers - what went wrong?
Submitted in Partial Fulfillment of the Course Requirements for Organizational Behavior MGMT591 Summer B 2012 Professor Milford
INTRODUCTION
The organization that I have selected for my final project is Lehman Brothers, I do not have any stake in the company, but I am very curious and interested in the company. I want to find out how did one of the biggest and most successful companies in the world fall apart.
Lehman Brothers was a very large global financial services firm founded in 1850 in Montgomery, Alabama. They were the fourth largest investment bank in the United States. The firm also was in business for equity and fixed-income sales, and trading, research, investment management, private banking, and private equity. The company employed about 26,200 employees.
Lehman Brothers had survived several economic hardships such as the railroad bankruptcies of the 1800s, the Great Depression of 1930, both World Wars, a capital shortage when it spun off by American Express in 1994, and also the capital management collapse and Russian debt default of 1998. However, the firms handling of subprime mortgages in the U.S housing market brought the company down to its knees.
Many blame Lehman Brothers as the prime culprit of the U.S housing boom in 2003 as they acquired five mortgage lenders. Among those five, was subprime lender BNC Mortgage. It was this acquisition along with Aurora Loan Services, which specialized in Alt-A Loans, would be the root cause of the massive cracks that emerged in the U.S housing market.
Lehman’s Chief Financial Officer stated that risks posed to the housing market were under control and would have little impact on earnings. He also stated that he did not foresee problems in the subprime market that would spill over or impact the economy or the rest of the housing market. He was
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