Document Type
Case Study
Case Series
The Lehman Brothers Bankruptcy
JEL Codes
G01, G28
Abstract
On September 15, 2008, Lehman Brothers Holdings, Inc., the fourth-largest U.S. investment bank, sought Chapter 11 protection, initiating the largest bankruptcy proceeding in U.S. history. The demise of the 164-year old firm was a seminal event in the global financial crisis. Under the direction of its long-time Chief Executive Officer Richard Fuld, Lehman had been very successful pursuing a high-leverage, high-risk business model that required it to daily raise billions of dollars to fund its operations. Beginning in 2006, Lehman began to invest aggressively in real-estate-related assets and soon had significant exposures to housing and subprime mortgages, just as these markets began to sour. Lehman employed a cadre of accountants and risk professionals to continually monitor its balance sheet, key ratios, and risks. It undertook desperate and questionable actions to stay alive. Nevertheless, Lehman ultimately failed because of an inability to finance itself. This overview case provides background information about Lehman’s business and key personnel and also the economic environment during 2006-2008. It may be utilized individually or in connection with any of the other seven YPFS Lehman case studies.
Recommended Citation
Wiggins, Rosalind Z.; Piontek, Thomas; and Metrick, Andrew
(2019)
"The Lehman Brothers Bankruptcy A: Overview,"
Journal of Financial Crises: Vol. 1
:
Iss. 1, 39-62.
Available at:
https://elischolar.library.yale.edu/journal-of-financial-crises/vol1/iss1/2
Date Revised
2019-03-20
Included in
Banking and Finance Law Commons, Bankruptcy Law Commons, Economic History Commons, Finance Commons, Legal Commons, Policy Design, Analysis, and Evaluation Commons