Hal S. Scott
- Published in print:
- 2016
- Published Online:
- January 2017
- ISBN:
- 9780262034371
- eISBN:
- 9780262332156
- Item type:
- chapter
- Publisher:
- The MIT Press
- DOI:
- 10.7551/mitpress/9780262034371.003.0004
- Subject:
- Economics and Finance, Economic History
This chapter examines the 2008 Lehman bankruptcy. On September 15, 2008, the Lehman group parent holding company, Lehman Brothers Holdings Inc. (LBHI), filed for bankruptcy protection, setting into ...
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This chapter examines the 2008 Lehman bankruptcy. On September 15, 2008, the Lehman group parent holding company, Lehman Brothers Holdings Inc. (LBHI), filed for bankruptcy protection, setting into motion the largest corporate failure in US history. In the years leading up to its bankruptcy, Lehman made significant missteps although the firm was not alone in embracing high leverage and risky strategies. Chief among these missteps was an overly aggressive growth strategy that, beginning in 2006, led it to commit an increasing amount of capital to commercial real estate, leveraged loans, and illiquid private equity investments. It is argued that connectedness of other institutions to Lehman did not create systemic risk.Less
This chapter examines the 2008 Lehman bankruptcy. On September 15, 2008, the Lehman group parent holding company, Lehman Brothers Holdings Inc. (LBHI), filed for bankruptcy protection, setting into motion the largest corporate failure in US history. In the years leading up to its bankruptcy, Lehman made significant missteps although the firm was not alone in embracing high leverage and risky strategies. Chief among these missteps was an overly aggressive growth strategy that, beginning in 2006, led it to commit an increasing amount of capital to commercial real estate, leveraged loans, and illiquid private equity investments. It is argued that connectedness of other institutions to Lehman did not create systemic risk.
