Effects of the Financial Crisis on Lehman brothers
Uploaded by brianalu on Aug 28, 2013
Effects of the Financial Crisis on Lehman brothers
Introduction
In 2008, the entire world witnessed a major financial catastrophe brought by the sub-prime mortgage crisis affected the U.S at the time. The measure taken by the U.S right after the September 11-terror attacks aimed at stimulating the economy, were cited as the major culprits affecting this crisis. According Taylor (2009) the financial crisis happened when the economy underwent a period of over prosperity due to a sudden economic boom. (p. 1)
History of Lehman brother’s
Lehman brothers surely come a long way from its origins in 1844 when two brothers, Emanuel and Hendry Lehman created the company as a general store. Lehman brother started to grow through the capitalization of high cotton prices, which saw its growth explode tremendously. Through strategic partnership, the business survived and was able to endure the turmoil that rocked America during the 18 century. Lehman was also able to join the financial advisory business. Later in the year 1883, Lehman become a member of the coffee exchange. Finally, 1887 Lehman headed to the New York stock exchange where he began the work of underwriting; Lehman’s first client was the “international steam pump company” and from then on, grew to bigger clients such as Woolworth s and sears roebuck and company. It also had partnership with Goldman Sach’s at the time.
Lehman brothers in the 20th century
Lehman brothers had offices in the world trade center in America. On the September 11, 2001, the building got a direct hit from a terror ploy that destroyed it substantially leaving Lehman brother without a head office and one employee dead. Lehman brothers endeavored to quickly recover from the loss and set up an improvised trading floor in a hotel in New Jersey in record time of under fifty hours after the terror attack. In addition, after a week when market opened, it was business as usual for Lehman brothers operations. A month later, they acquired a brand new 32-story building for a whopping 700 million dollars. Criticisms surmounted as to why Lehman brothers never returned to their former building in lower Manhattan.
Lehman’s collapse
In 2008, Lehman brother got a sire of reprieve when the Federal Reserve scheduled a meeting to discuss the liquidation of Lehman’s assets. Top of the agenda was the possible sale of Lehman’s to either Barclay's bank or bank of America. According to reports, an outright sale of Lehman brothers was...