Lehman was strangled by a massive.. (Page 53)

Lehman Brothers' investment banking services finally succumbed to the sub-prime mortgage crisis that had rocked the whole of North America and also, the world economy. Lehman was strangled by a massive credit crisis and fast plummeting real estate prices in the United States of America. The enormous loss, running into billions of dollars, in bad real estate loans forced Lehman Bros to file for bankruptcy. However some media reports suggest, the fall of the 158-year old institution that started cotton trade in US before the American Civil War and financed the railroad that built a nation, got hit by a large dose of bad luck, pride, arrogance and greed.

Primarily, the pride of its chief executive officerRichardFuld. Lehman's downfall was also triggered by the refusal of other global banks to do business with it because of its complex and, at times, opaque ways of trading. Housing loans given by the bank to people in the US with little support made these loans very risky, and when interest rates rose, these borrowers could no more repay Lehman. This led to huge losses, the extent of which is not yet clear unfortunately. Most other banks stopped trading with Lehman. This led to it losing almost all business and triggered its fall. The final straw for Lehman was the fact that both Barclays Pic of the United Kingdom and Bank of America Corp...

read more...