RUNNING HEAD: The Lingering Impact of the Lehman Brothers Bankruptcy 1
Assignment 2: The Lingering Impact of the Lehman Brothers Bankruptcy
Strayer University
FIN 540 – Advanced Corporate Finance
In the beginning of 2007, Fortune Magazine declared Lehman Brothers as the No.1 “most
admired securities firm.A year later, that once shining castle on the hill filed for bankruptcy
protection and have sent to financial markets reeling ever since to find their identity.The gravity
, The Lingering Impact of the Lehman Brothers Bankruptcy 2
of it all can be displayed by imagining in Apple computers suddenlywent out of business and the
effect that could have on the technology market for generations. The difference and scary part to
look back at it is this: When a mammoth firm like Lehman Brothers which owned assets
throughout the entire world goes down…So does the economy and securitization of world. What
I found out after researching this is that Lehman Brothers was not the cause of the disease that
has become our over-indulgent and over-leveraged financial system, but the symptom. Lehman
brothers and other financial firms knew they were engaging in several deadly practices before the
housing crisis took form: Over-leveraging debt, short-term minded investments, repo-market
intercompany assets and junk bonds investing.
Lehman Brothers financial meltdown and decision to go bankrupt in 2008 had a stark
effect on the financial markets in the world. As written in an article from Investopedia and
shown in the movie Margin Call, there are some untold truths many do not know. Lehman
Brothers was financially sound firm with a reputation as solid as a rock, until they found out that
they were more like a Hindenburg blimp with a gas leak. Little did the rest of the world know
that Lehman Brothers was just the match and the rest of the world was the Hindenburg. I think it
is unfair to blame any of the credit crisis on Lehman Brothers. The rest of America was perfectly
fine with accepting loans from people that couldn’t afford and preying on those who did not fully
understand what they were signing and the implications of their loans. The story of Lehman
Brothers should not be one of an evil company but the only one without a group-think mentality
that held up the integrity values it wrote in its by-laws.
How did Lehman Brothers and the rest of America get here? Lehman Brothers and others
for a few years had been investing in junk bonds and the Repo Market. Investment firms
traditionally packaged thousands of prime mortgage loans and sold them to investors as bonds
Assignment 2: The Lingering Impact of the Lehman Brothers Bankruptcy
Strayer University
FIN 540 – Advanced Corporate Finance
In the beginning of 2007, Fortune Magazine declared Lehman Brothers as the No.1 “most
admired securities firm.A year later, that once shining castle on the hill filed for bankruptcy
protection and have sent to financial markets reeling ever since to find their identity.The gravity
, The Lingering Impact of the Lehman Brothers Bankruptcy 2
of it all can be displayed by imagining in Apple computers suddenlywent out of business and the
effect that could have on the technology market for generations. The difference and scary part to
look back at it is this: When a mammoth firm like Lehman Brothers which owned assets
throughout the entire world goes down…So does the economy and securitization of world. What
I found out after researching this is that Lehman Brothers was not the cause of the disease that
has become our over-indulgent and over-leveraged financial system, but the symptom. Lehman
brothers and other financial firms knew they were engaging in several deadly practices before the
housing crisis took form: Over-leveraging debt, short-term minded investments, repo-market
intercompany assets and junk bonds investing.
Lehman Brothers financial meltdown and decision to go bankrupt in 2008 had a stark
effect on the financial markets in the world. As written in an article from Investopedia and
shown in the movie Margin Call, there are some untold truths many do not know. Lehman
Brothers was financially sound firm with a reputation as solid as a rock, until they found out that
they were more like a Hindenburg blimp with a gas leak. Little did the rest of the world know
that Lehman Brothers was just the match and the rest of the world was the Hindenburg. I think it
is unfair to blame any of the credit crisis on Lehman Brothers. The rest of America was perfectly
fine with accepting loans from people that couldn’t afford and preying on those who did not fully
understand what they were signing and the implications of their loans. The story of Lehman
Brothers should not be one of an evil company but the only one without a group-think mentality
that held up the integrity values it wrote in its by-laws.
How did Lehman Brothers and the rest of America get here? Lehman Brothers and others
for a few years had been investing in junk bonds and the Repo Market. Investment firms
traditionally packaged thousands of prime mortgage loans and sold them to investors as bonds
