10 years Lehman bankruptcy
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  10 years Lehman bankruptcy
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Poll
Question: In hindsight, was letting Lehman Brothers go bankrupt the right thing to do?
#1
Yes. (D)
#2
Yes. (R)
#3
Yes. (L)
#4
Yes. (G)
#5
Yes. (O/I)
#6
No. (D)
#7
No. (R)
#8
No. (L)
#9
No. (G)
#10
No. (O/I)
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Author Topic: 10 years Lehman bankruptcy  (Read 2911 times)
Anzeigenhauptmeister
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Junior Chimp
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« on: September 10, 2018, 08:44:20 PM »

10 years ago, a shockwave went through the markets. The U.S. government let the investment bank Lehmann Brothers Holdings Inc. go broke. A fatal chain reaction ensued, the world plunged into recession. Its impact is still noticeable down to the present day. The economical fallout could only be stemmed by measures such as multi-billion-dollar aids, reduction of base rates of the note-issuing bank and governmental assurance given to depositors. Out of the big five U.S. investment banks, only two Goldman Sachs and Morgan Stanley survived as independent enterprises.
On Monday, September 15, 2008, Richard Severin Fuld Jr., the final Chairman and Chief Executive Officer of Lehman Brothers, declared bankruptcy, leaving a pile of debts in the amount of $600 billion, 25.000 redundant employees, and a crash of the Dow Jones by 500 points, the sharpest fall in prices since the 9/11 terror attacks.
A March 2010 report by the court-appointed examiner indicated that Lehman executives regularly used cosmetic accounting gimmicks at the end of each quarter to make its finances appear less shaky than they really were.

Did Secretary of the Treasury Henry Paulson do the right thing by opposing commitments to public funds towards a bailout and therefore thwarting a purchase by Barclays?

Do you think Richard Fuld will ever understand why the government let Lehman Brothers collapse?

What did we learn from the bankruptcy of Lehman Brothers, especially concerning subprime mortgages and accounting frauds?

Do you think there is currently a huge, hidden stock market bubble that is at the point of bursting? If so, will its impacts be even more devastating than the 2008 stock market crash?


Richard Severin Fuld Jr., the final Chairman and Chief Executive Officer of Lehman Brothers


Secretary of the Treasury Henry Paulson


Lehman Brothers Bank in New York


Formers Lehman Brothers employees leaving their offices with boxes in their hands
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CrabCake
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« Reply #1 on: September 11, 2018, 04:28:56 AM »

Even if you oppose the way in which subsequent banks were bailed out, there really wasn't any advantage to the chaotic way Lehman went out. If the same thing had happened to AIG etc, the financial system would have gone into global meltdown that would have destroyed the world economy.
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Sir Mohamed
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« Reply #2 on: September 11, 2018, 08:58:49 AM »

What bothers me the most is that the highest ranking bank executives and gamblers didn't go to jail. Instead, we're now starting to repeat the same mistakes by deregulating Wall Street yet again. Some people never learn.
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Tintrlvr
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« Reply #3 on: September 11, 2018, 10:03:07 AM »

Even if you oppose the way in which subsequent banks were bailed out, there really wasn't any advantage to the chaotic way Lehman went out. If the same thing had happened to AIG etc, the financial system would have gone into global meltdown that would have destroyed the world economy.

Right. This doesn't mean don't hold the individuals responsible (more than they actually were), but it was a mistake motivated by purely political considerations to let Lehman collapse and caused a lot of unnecessary collateral damage.
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Mr.Phips
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« Reply #4 on: September 20, 2018, 07:34:23 PM »

It actually ended up costing the government more in the end to NOT bail them out, so yes it was the wrong decision.  I'm surprised that people as smart as Paulson, Bernanke, and Geithner didn't realize this.
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Cory
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« Reply #5 on: September 22, 2018, 01:05:53 AM »

It actually ended up costing the government more in the end to NOT bail them out, so yes it was the wrong decision.  I'm surprised that people as smart as Paulson, Bernanke, and Geithner didn't realize this.
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Dabeav
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« Reply #6 on: October 01, 2018, 10:07:29 AM »

Should've let them all fail.
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mvd10
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« Reply #7 on: October 01, 2018, 10:43:44 AM »


Ehm, and what would have happened after that?
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pbrower2a
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« Reply #8 on: October 04, 2018, 09:05:45 PM »

It's a tough call. Lehman Brothers was a huge player in investment banking, and it had done much good in the past. Investment banking arranges the meeting of capital with business opportunities. Nobody seems to have emerged to take over the role that Lehman brothers once had. It will be more difficult to start a new giant business in America, and this will make more likely that Americans depend upon foreign investors to do anything novel and on a large scale. This will slow innovation in America and ensure that America invests less in job-creating... good job-creating... plant and equipment.

On the other side, Lehman Brothers had gotten extremely corrupt and flamboyantly so. It went heavily into an economic activity (residential lending) better suited for retail banking -- the sort of banking that Giga-Bank, Farmers' and Merchants' Bank of Podunk Center, and Shangri-La Savings and Loan did. Legislation allowed retail banks, investment banks, and insurance companies to get into each others' business because they all handled money. Such legislation allowed some unwise choices. 

For good reason, physicians, pharmacists, and undertakers do not share functions even if all three get involved in end-of-life reality. You can just imagine the conflicts of interests.   

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RaphaelDLG
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« Reply #9 on: October 21, 2018, 11:27:57 PM »

Should have nationalized
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Computer89
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« Reply #10 on: October 22, 2018, 12:01:21 AM »

According to the Biographical Film Too Big to Fail ,  it was the British and not Paulson who killed the  Barclays Deal. They were pretty close to a deal and actually had all the other major banks buy up Lehman's toxic assets and Barclays was about to agree to the deal but the British Regulators killed it.
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Mr.Phips
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« Reply #11 on: October 22, 2018, 05:05:08 PM »

According to the Biographical Film Too Big to Fail ,  it was the British and not Paulson who killed the  Barclays Deal. They were pretty close to a deal and actually had all the other major banks buy up Lehman's toxic assets and Barclays was about to agree to the deal but the British Regulators killed it.

I think the British regulators required the US the guarantee Lehman's toxic assets, which they could have done and would have likely made a profit on them later on.
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Computer89
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« Reply #12 on: October 22, 2018, 05:09:51 PM »

According to the Biographical Film Too Big to Fail ,  it was the British and not Paulson who killed the  Barclays Deal. They were pretty close to a deal and actually had all the other major banks buy up Lehman's toxic assets and Barclays was about to agree to the deal but the British Regulators killed it.

I think the British regulators required the US the guarantee Lehman's toxic assets, which they could have done and would have likely made a profit on them later on.

Barclays wouldnt have bought it with the toxic assets though, thats why Paulson called all the top banking CEO's to the Fed to come to deal where they would have bought the toxic assets. If you are talking about that guarantee according to To Big to Fail the CEO's had come to an tentative agreement to buy the toxic assets.
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Mr.Phips
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« Reply #13 on: October 22, 2018, 05:14:55 PM »
« Edited: October 22, 2018, 05:19:28 PM by Mr.Phips »

According to the Biographical Film Too Big to Fail ,  it was the British and not Paulson who killed the  Barclays Deal. They were pretty close to a deal and actually had all the other major banks buy up Lehman's toxic assets and Barclays was about to agree to the deal but the British Regulators killed it.

I think the British regulators required the US the guarantee Lehman's toxic assets, which they could have done and would have likely made a profit on them later on.

Barclays wouldnt have bought it with the toxic assets though, thats why Paulson called all the top banking CEO's to the Fed to come to deal where they would have bought the toxic assets. If you are talking about that guarantee according to To Big to Fail the CEO's had come to an tentative agreement to buy the toxic assets.

The reason why British Regulators killed it was because Paulsen wouldn't offer to have the US guarantee the toxic assets and operations during the sale/transition period.  It would have been very simple to do just do that and would have cost far less than what it ended up costing the us government when it did fail.
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Computer89
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« Reply #14 on: October 22, 2018, 05:17:07 PM »

According to the Biographical Film Too Big to Fail ,  it was the British and not Paulson who killed the  Barclays Deal. They were pretty close to a deal and actually had all the other major banks buy up Lehman's toxic assets and Barclays was about to agree to the deal but the British Regulators killed it.

I think the British regulators required the US the guarantee Lehman's toxic assets, which they could have done and would have likely made a profit on them later on.

Barclays wouldnt have bought it with the toxic assets though, thats why Paulson called all the top banking CEO's to the Fed to come to deal where they would have bought the toxic assets. If you are talking about that guarantee according to To Big to Fail the CEO's had come to an tentative agreement to buy the toxic assets.

The reason why British Regulators killed it was because Paulsen wouldn't offer to have the US guarantee the toxic assets.  It would have been very simple to do just do that. 

Thats true
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