Assignment 2: The Lingering Impact of Lehman Brothers Bankruptcy
FIN 540 – Advanced Corporate Finance
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 foundout 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 actually 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 firmstraditionallypackaged thousands ofprime mortgage loansandsold them
to investors as bonds which are assumed to be the safest bet in investing. The
problems came when Lehman Brothers and other firms started selling bonds with
subprime mortgages and not prime loans. It became especially murky territory when
FIN 540 – Advanced Corporate Finance
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 foundout 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 actually 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 firmstraditionallypackaged thousands ofprime mortgage loansandsold them
to investors as bonds which are assumed to be the safest bet in investing. The
problems came when Lehman Brothers and other firms started selling bonds with
subprime mortgages and not prime loans. It became especially murky territory when
