Lehman Brothers Failure

On September 15, 2008, Lehman Brothers, the fourth largest U.S. investment bank at the time, filed for bankruptcy. At the time of its collapse, Lehman Brothers had $639 billion in assets, and $619 billion in debt, making it the largest bankruptcy filing in history. Lehman's collapse also made it the largest victim of the U.S. subprime mortgage crisis. This paper examines the collapse of Lehman Brothers and the factors that led to that failure.

Lehman Brothers started as an investment bank that dated back to the 1850s. During its 158-year history, the firm survived the railroad bankruptcies of the 1800s, the Great Depression and two World Wars. It did not, however, survive the subprime mortgage meltdown, or its own bad business decisions.

The subprime mortgage crisis had its beginnings in the early 2000s when fear of recession was significant. To head off recession, the Federal Reserve lowered...
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