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The Lehman Brothers Bankruptcy A: Overview

Author

Listed:
  • Rosalind Z. Wiggins
  • Thomas Piontek
  • Andrew Metrick

    ()

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 some 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.

Suggested Citation

  • Rosalind Z. Wiggins & Thomas Piontek & Andrew Metrick, 2014. "The Lehman Brothers Bankruptcy A: Overview," Yale School of Management YPFS Cases 59181, Yale School of Management.
  • Handle: RePEc:ysm:ypfswp:59181
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    File URL: http://som.yale.edu/sites/default/files/files/001-2014-3A-V1-LehmanBrothers-A-REVA.pdf
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    References listed on IDEAS

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    1. Christian M. McNamara & Andrew Metrick, 2014. "The Lehman Brothers Bankruptcy F: Introduction to the ISDA Master Agreement," Yale School of Management YPFS Cases 59185, Yale School of Management, revised Mar 2015.
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    1. repec:eee:chieco:v:46:y:2017:i:s:p:s35-s49 is not listed on IDEAS
    2. repec:vls:finstu:v:21:y:2017:i:3:p:32-44 is not listed on IDEAS

    More about this item

    Keywords

    Systemic Risk; Financial Crises; Financial Regulation;

    JEL classification:

    • G01 - Financial Economics - - General - - - Financial Crises
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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