Words of Wisdom

“Our income is like shoes; if too small, they gall and pinch us; but if too large, they can cause us to stumble and to trip.”                                                      - John Locke

BY NANKIE BAWA                          2 Mins Read

Many of us feel money is the solution to everything; that less money pinches but there’s nothing like enough money, but here’s an example which says something else.

On Sept. 15, 2008, Lehman Brothers filed for bankruptcy. Millions of people saw in the news for the first time: Hundreds of employees who were mostly dressed in business suits were leaving the bank's global offices one-by-one with bankers boxes in their hands. It was a sad reminder that nothing is forever—even in the richness of the financial and investment worlds.

Lehman's bankruptcy filing was the largest in history, with $639 billion in assets and $619 billion in debt, as its assets far surpassed those of previous bankrupt giants such as WorldCom and Enron. Lehman was the fourth-largest U.S. investment bank at the time of its collapse, with 25,000 employees worldwide.

Lehman's demise induced financial crises, which went at global level in financial markets in 2008. It made a steep fall of around $10 trillion in the market (capital). It was the largest monthly fall as the market fell down in October 2008.

Lehman Brothers started off their business as a dry-goods store, but eventually branched off into commodities trading and brokerage services.

They survived many challenges but couldn’t stand the collapse of the subprime mortgage market.

In the early 2000s before acquiring five mortgage lenders, Lehman first got into mortgage-backed securities and CDOs.

The firm posted multiple, consecutive losses and its share price dropped.

And finally, on Sept. 15, 2008, Lehman filed for bankruptcy with $639 billion in assets and $619 billion in debt.

It was a major company in the U.S., so its downfall was questioned by public that how did government let Lehman collapse. It was declared bankrupt and it was approximately $46 billion erosion (fall). It provoked the purchase of Merrill Lynch by Bank of America (government decision).