Lessons from Lehman Brothers: Will We Ever Learn?

Time Context 2007 When the housing marketing began faltering in 2007. is the largest bankruptcy case in the United States. Richard Fuld was entrenched in a highly aggressive and leveraged business model. in fact. This. not unlike many other Wall Street players at the time. This led to the bankruptcy of the firm and ignited the global recession. .

Viewpoint Richard "Dick" Severin Fuld. Jr.  an American banker best known as the final Chairman and Chief Executive Officer of Lehman Brothers  had held this position since the firm's 1994 spinoff from American Express until 2008  was nicknamed the "Gorilla" on Wall Street for his competitiveness .

the firm filed for Chapter 11 bankruptcy protection following the massive exodus of most of its clients. 340 employees became jobless after the bankruptcy .  a global financial services firm  fourth-largest investment bank in the US  at 1:45 AM. and devaluation of its assets by credit rating agencies  23. drastic losses in its stock.Relevant Facts Lehman Brothers Holdings Inc.

Problem Statement/Issues Incompetent Top Managers  Culture and reward structure  Irrational decisions of managers  No transparency  Corruption  Lies told by the CEO  Negligence on behalf of Ernst & Young .

Alternative Courses of Actions Alternative 1 Repo 105 Alternative 2 Replacement of top managers Alternative 3 Selling the firm to other firms .

Disadvantage .Analysis and Evaluation Alternative 1 – Repo 105 Advantage .pretends there is stability in the firm .creates favorable net leverage and liquidity measures on the balance sheet. which was key for credit rating agencies and consumer confidence.

Alternative 2 – Replacement of top managers Advantage .there will be a possibility of reviving the firm since there is a total change in terms of management techniques and strategies.the employees will have a hard time in adjusting to the new system . Disadvantage .

. Disadvantage .Alternative 3 – Selling the firm to other firms Advantage .a stable company will be able to pay their debts as well as provide the needed capital to revive the firm.the stockholders will lose all their shares and the employees will have a hard time adjusting to the new management.

there will be a huge possibility that the company will regain the trust of the investors. This is best and most practical way to save the interest of the employees and the other stockholders.Conclusion and Recommendation  Our group concludes that the best possible solution is to sell the firm to other stable and reliable company that will reestablish the firm. Through this action. . The efforts to sustain the firm for the last 158 years (fourth largest investment bank in US) will not be put into waste.

org/case-studies/thedearth-of-ethics-and-the-death-of-lehmanbrothers http://en.asp .investopedia.References http://sevenpillarsinstitute.org/wiki/Lehman_Brothers http://www.com/articles/economics/09/ lehman-brothers-collapse.wikipedia.