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The dramatic fall of Lehman was due in large part to millions of risky mortgages propping up an unstable financial system. Homebuyers with mortgage payments they couldn't afford defaulted on their loans, sending shockwaves through Wall Street and leaving those borrowers vulnerable to foreclosure.
Though the 2008 crisis impacted the entire global financial system, it was caused by the subprime mortgage crisis in the United States. As a result, many of its major players were U.S. government officials and corporate leaders of U.S. financial institutions.
Presiding over one of the worst financial collapses in history, Richard S. Fuld, Jr. was the top executive at Lehman, leading the company to record profits before its economic crash. It is hard to pin the firm's disastrous decline entirely on Fuld, although he ultimately took responsibility for its demise.
The following day, major British bank Barclays announced its agreement to purchase, subject to regulatory approval, a significant and controlling interest in Lehman's North American investment-banking and trading divisions, along with its New York headquarters building.
Exposure to the mortgage market Lehman borrowed significant amounts to fund its investing in the years leading to its bankruptcy in 2008, an intricate process known as leveraging or gearing. A significant portion of this investment was in housing-related assets, making it vulnerable to a downturn in that market.
Barclays acquired the investment banking business of Lehman Brothers in September 2008.
The Family: Joshua and KaLea Lehman, plus kids E (11), Mia (8), Pip (7), Lil' J (4) and EG (7 months). The Lehmans currently live in Medfield, MA, but are anticipating a move to West Point, NY for Joshua's work in the military.
In the most dramatic moment of the Great Recession, the Federal Reserve (the Fed) withheld an emergency bailout from Lehman Brothers, a peer investment bank among other firms infamously deemed ?too big to fail.? In light of Lehman's banefully consequential bankruptcy, the Fed's decision remains a most controversial one ...