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Customer and Employee Losses in Lehman’s Bankruptcy

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Abstract

In our second post on the Lehman bankruptcy, we discussed the cost to Lehman’s creditors from having their funds tied up in bankruptcy proceedings. In this post, we focus on losses to Lehman’s customers and employees from the destruction of firm-specific assets that could not be deployed as productively with other firms. Our conclusions are based in part on what happened after bankruptcy—whether, for example, customer accounts moved to other firms or employees found jobs elsewhere. While these costs are difficult to pin down, the analysis suggests that the most notable losses were borne by mutual funds that relied on Lehman’s specialized brokerage advice and firms that employed Lehman for its equity underwriting services.

Suggested Citation

  • Erin Denison & Michael J. Fleming & Asani Sarkar, 2019. "Customer and Employee Losses in Lehman’s Bankruptcy," Liberty Street Economics 20190116, Federal Reserve Bank of New York.
  • Handle: RePEc:fip:fednls:87306
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    More about this item

    Keywords

    crisis; Bankruptcy; Lehman Brothers; customer employee losses;
    All these keywords.

    JEL classification:

    • G33 - Financial Economics - - Corporate Finance and Governance - - - Bankruptcy; Liquidation

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