The Reflection On "The Last Days Of Lehman Brothers"

The last days of Lehman- Brother are nothing less than a drama that is about the financial crisis that brought apocalyptic imagery. The impact of Lehman brothers upon the economy was huge that impacted the world finances. The company was one of the largest investment banks of the US that filed bankruptcy and led to serious financial crisis. The renowned investment bank the Lehman brother was questioned about the credit crisis and its. impact over the investors and bank performance. The default for the company increased that worried the investors and the stability of financial operations.

 The collapse of Lehman Brother impacted the financial stability and economies globally affecting the investors. This event was one the biggest in the Wall Streets history since the year 1990. The downfall of the Lehman brother did not take place suddenly it took place over a course of time starting from free fall. The company was of the opinion that US government would bail them out however things did not go as planned as the then Treasury Secretary Hank Paulson stated that no one would rescue Lehman Brothers and it led to the biggest bankruptcy in the history.

It is vital to state that the history of Lehman brother has been glorious for more than a decade thus capitalising the market and creating value. The failure of Lehman Brother is based upon several causes which includes bank borrowings in billion dollars so that it could invest in the housing market. This strategy worked and made the bank the fourth largest investment bank of the world. The terrorist attack in the year 2001 affected the housing market in the USA and Lehman Brother tried to attain profit by attaining 5 mortgage lenders by leading the production of securitised mortgages. This action of the bank impacted its business and acquiring Aurora Loan Services in Colorado and BNC Mortgage in California was one reason that led to its downfall. In the year 2007 Lehman Brother faced several lawsuits as the company did anything to make borrowers take loans. When the crisis deteriorated then the Lehman Brother started facing losses this was the cause of its failure. Moreover, there are several other reasons that led to the downfall such as misrepresentation of the financial data along with the complex structure.

The inability of the company to manage assets and lack of risk management was another reason. Lehman Brother faced managerial issues that affected its trading and high debt situation leading to bankruptcy. 

There are several factors that impacted the company and the global economy in terms of misrepresentation of data. It is revealed that while filing bankruptcy Lehman Brother stated that they had a total of about $613 billion of liabilities and total asset of $639 billion. The filing by the company also stated that it had about 100,000 bondholders along with several trustees. Thus the downfall of the company had a direct impact over the economy, investors and bondholders. Several companies were impacted due to the downturn of Lehman Brothers and they stated it to be a financial tsunami. This failure was a shock for the economy and finances internationally. The impact was over the complete global environment such as the oil prices that affected the investors.  The risk in the economy is huge due to the sharp downfall and liquidation faced by the Lehman Brother.

As per the understanding attained from the researches it is stated that regulators thought Lehman to be a small investment bank and its demise would not impact much. The truth on the other hand is that the company demise led to tremors in the financial system. The bank faced several uncertainties with the billion dollars of transaction faced leading to crisis. The transactions of the bank lead to crisis thus credit market seized that forced government to take measures by offering bank deposits. The government were not responding to the executives of Lehman Brother that led to the collapse. The fall of the company impacted the economy which required attention of the government to implement macroeconomics regulations so that the process of recovery is smooth and steady. The problems were being mitigated by allocating resources and offering social equity to help the investors prosperous. The bankruptcy of Lehman led to the foundation of several rules and new financial order to make the process of audit effective so that the financial misrepresentation is avoided.

As per the changing environment in my opinion the market and economies require effective policies and financial integration so that the companies are unable to make false statements. It is vital to have financial openness and effective supervision by the government and other regulatory bodies so that the investors are able to attain return. The risks are to be mitigated so that the financial market is not impacted, and international investments are prudent. The downfall of Lehman influenced the global economy and helped to create fair policies so that the money is not misused. The last day of Lehman Brother not only affected the share market, economy and the financial market it also helped the government to have stringent monitoring of the financial policies. The fall of the company was due to the unethical practices that were followed by the executives impacting the financial statements.