Why did lehman brothers take exposure in complex derivatives?
There was no one willing to buy Lehman Brothers as there were for other banks, example JP Morgan bought Bear Stearns, and when Richard Fuld, CEO for Lehman Brothers is making 60 million a year for 8 years straight (480 million to be exact) it makes the government think twice. Long story short, the government didn't have much invested in Lehman Brothers.
Lehman Brothers became bankrupt as a large part of their loan portfolio comprised of loans for buying real estate. With the meltdown in the property market in US the values of properties became lesser than the the value of loan outstanding. Due to this most of the loans became irrecoverable leading to bankruptcy of Lehman Brothers.
The Lehman Brothers company specialized in financial services. The main root cause of Lehman Brothers was due to the company falsifying earnings reports. This made their profits and losses appear more solid. Once news hit that the company was not doing as well as they were claiming, their stocks fell and they lost many clients.
On September 22, 2008, Nomura Holdings announced that it had agreed to acquire Lehman Brothers' franchise in the Asia Pacific region, including Japan, Hong Kong and Australia. The following day, Nomura announced its intention to acquire Lehman Brothers' investment banking and equities businesses in Europe and the Middle East. The deal became effective on Monday, 13 October. In 2007, non-U.S. subsidiaries of Lehman Brothers were responsible for over 50% of global revenue produced. In October…
The company's roots began in 1844 when Henry Lehman immigrated from Rimpar, Germany to Alabama, where he established a dry goods store that catered to local cotton farmers in Montgomery. Lehman Brothers evolved from merchandising to a commodities broker, and then later into underwriting where the firm helped finance construction of the Pennsylvania Railroad, among others. Henry, Emanuel and Mayer Lehman founded the Firm.
By how many points did the Dow Jones fall when Lehman Brothers announced that they were filing for Bankruptcy?
The Dow fell 504 points the day that Lehman Brothers announced their bankruptcy. To be fair the 500 plus point drop can be attributed to the ever worsening credit crisis that is effecting the financial industry. Merrill Lynch was bought out by Bank of America on the same day as the Lehman announcement. It is becoming apparent that AIG and Washington Mutual are on the brink of collapse as well.