Documente Academic
Documente Profesional
Documente Cultură
Allhmad-u-Lillah, for without His blessing we could never conduct this research, though it
is impossible to thank Him enough for this. All respect to his Holy Prophet Hazrat
Muhammad (SAW) who brought the light of knowledge when the humanity was wandering
We would like to thank our parents for their encouragement and suggestion they gave us.
We would like to acknowledge the guidance and support of our respected teacher
We are also thankful to all those who cooperated with us in the completion of
project, especially to the class fellows, teachers and to all those who directly or indirectly
helped us.
INTRODUCTION
Type Public
Fate Chapter 11 Bankruptcy
Founded Montgomery, Alabama, United States (1850)
Founder(s) Henry Lehman
Emanuel Lehman
Mayer Lehman
Headquarters New York City, New York, United States
Area served Worldwide
Key people Richard S. Fuld, Jr.(Chairman) & (CEO)
Industry Investment services
Products Financial Services
Investment Banking
Investment management
Market cap US$130 Million (As of September 15, 2008)
Revenue ▲ US$59.003 Billion (2007)
Operating income ▲ US$6.013 Billion (2007)
Net income ▼ US$6.7 Billion (2008)
Total assets ▲ US$691.063 Billion (2007)
Lehman Brothers Holdings Inc was a global financial-services firm active prior to its
bankruptcy and sale in 2008. The firm did business in investment banking, equity and fixed-
income sales, research and trading, investment management, private equity, and private
banking. It was a primary dealer in the U.S. Treasury securities market. Its primary
subsidiaries included Lehman Brothers Inc., Neuberger Berman Inc., Aurora Loan Services,
Inc., SIB Mortgage Corporation, Lehman Brothers Bank, FSB, Eagle Energy Partners, and
the Crossroads Group. The firm's worldwide headquarters were in New York City, with
regional headquarters in London and Tokyo, as well as offices located throughout the world.
Began of Lehman Brothers Crisis
Lehman's slow collapse began as the mortgage market crisis unfolded in the summer of
2007, when its stock began a steady fall from a peak of $82 a share. The fears were based on
the fact that the firm was a major player in the market for sub prime and prime mortgages,
and that as the smallest of the major Wall Street firms, it faced a larger risk that large losses
could be fatal.
But by the summer of 2008 the rollercoaster ride started to have more downs than ups. A
series of write offs was accompanied by new offerings to seek capital to bolster its finances
Lehman also fought a running battle with short sellers. The company accused them of
spreading rumors to drive down the stock's price; Lehman's critics responded by questioning
whether the firm had come clean about the true size of its losses. As time passed and losses
mounted, an increasing number of investors sided with the critics.
On June 9, 2008, Lehman announced a second-quarter loss of $2.8 billion, far higher than
analysts had expected. The company said it would seek to raise $6 billion in fresh capital
from investors. But those efforts faltered, and the situation grew more dire after the
government on Sept. 8 announced a takeover of Fannie Mae and Freddie Mac. Lehman's
stock plunged as the markets wondered whether the move to save those mortgage giants
made it less likely that Lehman might be bailed out.
On Sept. 10, the investment bank said that it would spin off the majority of its remaining
commercial real estate holdings into a new public company. And it confirmed plans to sell a
majority of its investment management division in a move that it expects to generate $3
billion. It also announced its latest round of bad news -- an expected loss of $3.9 billion, or
$5.92 a share, in the third quarter after $5.6 billion in write-downs.
In August 2007, Lehman closed its subprime lender, BNC Mortgage, eliminating 1,200
positions in 23 locations, and took a $25-million after-tax charge and a $27-million reduction
in goodwill. The firm said that poor market conditions in the mortgage space "necessitated a
substantial reduction in its resources and capacity in the subprime space".
In 2008, Lehman faced an unprecedented loss due to the continuing subprime mortgage
crisis. Lehman's loss was apparently a result of having held on to large positions in subprime
and other lower-rated mortgage tranches when securitizing the underlying mortgages;
whether Lehman did this because it was simply unable to sell the lower-rated bonds, or made
a conscious decision to hold them, is unclear. In any event, huge losses accrued in lower-
rated mortgage-backed securities throughout 2008. In the second fiscal quarter, Lehman
reported losses of $2.8 billion and was forced to sell off $6 billion in assets. In the first half of
2008 alone, Lehman stock lost 73% of its value as the credit market continued to tighten. In
August 2008, Lehman reported that it intended to release 6% of its work force, 1,500 people,
just ahead of its third-quarter-reporting deadline in September.
BANKRUPTCY FILLING
Lehman Brothers filed for Chapter 11 bankruptcy protection on September 15, 2008. J.P.
Morgan provided Lehman Brothers with a total of $138 billion dollars in "Federal Reserve-
backed advances." The cash-advances by JPMorgan Chase were repaid by the Federal
Reserve Bank of New York for $87 billion on September 15th and $51 billion on September
16th.]
Recommendations