Lehman Brothers Holdings, Inc.

In: Business and Management

Submitted By willyac
Words 9454
Pages 38
Lehman Brothers Holdings, Inc.
Introduction - The Rise and Fall of Lehman Brothers.
Loose regulations, deception, and greed were the root of all evil for one of the largest investment banks in the world.
Lehman Brother’s was founded in 1850. Lehman Brother’s survived the Great Depression, WWI and WWII. In 1969 Lehman Brother’s hired Richard “Dick” S. Fuld Jr. as an intern who in 1994 became CEO of the Company. During Bill Clinton’s Presidency government started to support middle and lower class people to own their own houses. During this time a XX”Fair Housing Act” was created which was supposed to stop mortgage banks from discriminating lower income people from owning their own houses. The 911 attacks from 2001 created the greatest loss in Wall Street since The Great Depression. George Bush and the government encouraged Americans to buy more property. Mortgage companies started to take advantage of all these factors and lured low income uneducated people to buy mortgages with introductory rates. They never warned these buyers that these were just introductory rates that would later increase. This in turn created a larger problem for the new uneducated homeowners. These new loans created havoc for the homeowners that were struggling to make payments, and then came the massive layoffs. The economy nearly came to a standstill, and the housing market was one of the hardest hit sectors in the global economy. With the perfect situations created by loose regulations, and the perceived opportunities to make massive profits, Lehman Bros seized the opportunity to make huge gains. The strategic moves in order to cover the perception of false profits caught up to the company. When bank of America found out that they were loaning money to the Lehman Bros, they were making loans on securities that were worthless; Bank of America wanted some liquid collateral. Lehman…...

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