Introduction to the Topic
Title:The Fall of Lehman Brothers: A Trigger to the Global Financial Crisis
● Lehman Brothers was one of the largest and most influential investment banks in the
world.
● Its collapse on September 15, 2008, marked the largest bankruptcy in U.S. history, with
over $600 billion in assets.
● The fall of Lehman Brothers acted as a catalyst for the 2008 Global Financial Crisis,
shaking global markets and destroying investor confidence.
● This event exposed the weaknesses in the global financial system such as excessive
risk-taking, lack of regulation, and overreliance on debt.
Early History of Lehman Brothers
Title: From Cotton Trading to Wall Street Giant (1850–1900s)
● Founded in 1850 in Montgomery, Alabama by Henry Lehman, later joined by his
brothers Emanuel and Mayer Lehman.
● The company started as a small cotton trading business, buying and selling cotton from
local farmers.
● As the U.S. economy grew, Lehman Brothers gradually shifted from trading goods to
financing businesses, especially in the industrial and railroad sectors.
● By the late 1800s, Lehman Brothers had moved its headquarters to New York City,
becoming more involved in investment banking.
Growth and Expansion
Title:Lehman’s Rise: Growth, Mergers, and Milestones
● Lehman Brothers played a major role in financing the industrialization of the United
States, funding companies in manufacturing, energy, and transportation.
● The firm grew steadily through the 20th century, surviving wars, recessions, and the
Great Depression.
● Major mergers and acquisitions helped Lehman expand most notably with Kuhn, Loeb &
Co. in 1977, strengthening its position on Wall Street.
● By the early 2000s, Lehman Brothers had become the 4th largest investment bank in the
U.S., behind Goldman Sachs, Morgan Stanley, and Merrill Lynch.
● It had offices in over 40 countries, with strong positions in investment banking, asset
management, and trading.
Pre-Crisis Financial Performance
Title: The Boom Before the Fall (Early 2000s)
● In the early 2000s, Lehman Brothers enjoyed record profits due to its aggressive
expansion into mortgage-backed securities (MBS) and real estate investments.
● Between 2005 and 2007, its revenues and stock prices rose sharply, and the company
was seen as one of Wall Street’s top performers.
● However, much of this growth was based on risky subprime mortgages loans to
borrowers with poor credit.
● When housing prices started to fall in 2007, these mortgage assets rapidly lost value.
● Lehman was heavily exposed to this market, which ultimately led to massive losses and
its downfall in 2008.
