Lehman Brothers, on the other hand, was left out in the cold. Merrill Lynch was about to go bankrupt, but Bank of America saved it and bought it for $50 billion. This led Bank of America to find a huge hole in Lehman's balance sheet. This led to life-changing rewards for traders and profits for businesses.ĭuring due diligence, Lehman Brothers' management spent too much time with another company. Modern finance gave people a false sense of security by spreading risk out over a large area.

This made them take on more risk, which led to their downfall in the end. Lehman Brothers tried to make more money by selling more complicated products like credit default swaps. Lehman Brothers went out of business because they took risks by selling more complicated financial products and spent too much time on due diligence with another company, which left them with a huge hole in their balance sheet.ĭick was hard to get to know because he put up a wall around himself, while Ford had over 60 offices and 28,000 employees around the world. During the opening of Lehman Brothers' new European headquarters at Canary Wharf, Dick Fuld, the company's CEO, made a very harsh attack on people who sell short.

His goal was to beat Merrill Lynch, Morgan Stanley, and Goldman Sachs, which were the company's biggest competitors. Lehman Brothers went from being a traditional investment bank to using borrowed money to play the markets. was a key part of Lehman Brothers' success and growth. A team led by Bob Diamond was sent to New York to do research and evaluate the opportunity. Bank of America and Barclays were both looked at as possible companies to buy. Instead, the bank was saved by its competitors.

Lehman Brothers were in danger of going bankrupt because it had made a lot of big property investments, lost billions of dollars, and had trouble getting credit and gaining the trust of its shareholders.ĭuring the subprime mortgage crisis and the fall in home prices, Lehman Brothers were in trouble, but the government didn't help them out. The heads of America's biggest banks were called to a crisis meeting to decide whether to keep it alive or let it go bankrupt, which could have had serious effects on the world economy. When Lehman Brothers were about to go bankrupt in 2008, the US was in a tough spot. The bankruptcy of Lehman Brothers led to a global financial crisis with terrible results. Lehman Brothers in 2008, which caused a global financial crisis and billions of losses, highlights the role of risky expansion, excessive focus on due diligence, high leverage ratio, poor decision-making, failed negotiations, and greed in the downfall of the firm. Lehman Brothers - The Bank That Bust the World

The bank that bust the world transcript