Lehman Brothers

In: Business and Management

Submitted By fitzbri
Words 4263
Pages 18
Too Big To Fail: The Rise and Fall of Lehman Brothers and its effects on the Market
Failure of Lehman Brothers was due to aggressive leveraging and poor regulation. Led to re evaluating credit default swaps and how large companies look at risk.
The 15th of September in 2008 the United States 4th largest investment bank filed for bankruptcy with devastating consequences for the financial market. After a period of impudent investments and poor oversight both internally and externally this paper will look at the many causes and subsequent effects Lehman’s failure had on the U.S. financial system.
Lehman Brothers A Versitile Company
Henry Lehman Immigrated from Rimpar, Germany, to Montgomery, Alabama in 1944 where he established a small hardware store that sold groceries, dry goods, and cotton related tools and equipment to the local farmers. Six years later his brothers Emanuel and Mayer joined him in his endeavor and Lehman Brothers was born. Not too long after it’s inception Lehman Brothers branched out from general merchandising and involved themselves in commodities brokerage. Lehman’s became the major brokers for the purchase and sale of cotton in Montgomery and it’s surrounding areas. By 1858 Lehman Brothers had opened up an office in New York and expanded it’s commodities trading in addition to obtaining a foothold into the powerful New York financial community. After the Civil War passed Lehman Brothers drew most of their attention to their New York office and with it the financial arm of their business. By 1870 Lehman’s had helped establish the first cotton exchange and also spearheaded the creation of the Coffee and Petroleum Exchange. Lehman maintained ties with their southern roots and subsequently became the primary fiscal agent to the state of Alabama. Lehman handled the issuance of Alabama’s bonds overcoming many challenges due…...

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