The document summarizes the collapse of Lehman Brothers, the largest bankruptcy in U.S. history. It provides background on Lehman Brothers and describes how the company grew in the 1990s-2000s through real estate lending. It then explains how the bursting of the real estate bubble in the late 2000s led to increased mortgage defaults that Lehman Brothers was unable to cover, ultimately forcing it to file for Chapter 11 bankruptcy protection on September 15, 2008, with $691 billion in assets. The collapse had major global impacts and significantly exacerbated the late-2000s financial crisis.

1. Lehman Brothers
The Collapse of the Top American Bank
Fatih Aydogdu – Cengizhan Bolat

2. Agenda
 The Company
 The History
 The Bankruptcy
 Chapter 11
 Repo 105
 Global Impact
 References
Fatih Aydogdu - Cengizhan Bolat

3. The Company
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4. Lehman Brothers
 Founded: 1850
 Industry: investment services
 Headquartered in New York City
 Products: Capital Markets
Investment Banking
Investment Management
 Employees: 26,200
 Revenue: $59 billion
 Assets: $639 billion
 Liabilities: $613 billion
 Balance Sheet: $691 billion
 Auditor: Ernst & Young
 Bankrupt: 15. September 2008
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5. Investment Banking in the U.S. 2
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6. The History
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7. The History
1990 - 2000
– Establishment of new Internet-based companies
– The low interest rates environment helped raising start-up capital
2000 – 2001
– Companies increase their stock prices only with e-/.com
– The NASDAQ peaking at 5,132.52
– Correction by most market analysts
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Fatih Aydogdu - Cengizhan Bolat

8. The History
11. September 2001
– The whole nation was shocked
– The people were afraid to spent money
– The economy was in a recession
– The government decreased the interest rate to stimulate the economy
– People started to spent more and more money
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Fatih Aydogdu - Cengizhan Bolat

10. The History
– People bought houses with mortgage credits
– Banks gave credits with lower credit requirements
– More than 50% get a own house
– The demand increased
– The house prices incresed
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12. The Bankruptcy
Fatih Aydogdu - Cengizhan Bolat

13. Why has Lehman Brothers collapsed ?
– The FED decided to raise the interest rates more and more
– The economy was on a top
– The mortgage loans also increased
– More and more people came in trouble to pay back their
loans
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Fatih Aydogdu - Cengizhan Bolat

14. The Collapse
– The first debitors failed and had to leave their houses
– Houses stood empty
– Houseprices decreased
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15. The Collapse
– The mortgage loans couldn`t be paid
– The Bank were not able to cover the debt
Banks
CDO
AAA
Banks/InvestorsCRA
– The gambling of the Banks started
– The packages with the toxic investments were spread around the
world
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16. Chapter 11
Chapter 11 is a chapter of the United States
Bankruptcy Code, which usually results in
reorganization of the debtor's business or personal
assets and debts, but can also be used as a
mechanism for liquidation.
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Fatih Aydogdu - Cengizhan Bolat

17. Repo 105
Lehman Brothers
Hudson Inc.
$ 110
120
Lehman
floats a
repurchase
instrument
Fernway
capital LLP`s
pruchase
them
Transferred to
its subdsidary
Hudson Inc.
It is under
control of
Lehman
Projected this
a sale
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18. Global Impact
Fatih Aydogdu - Cengizhan Bolat

19. Global impact
 The reason why Lehman Brothers sought to file for bankruptcy was
due to their failure to secure enough capital to clear their debts.
 The collapse saw the US stocks fluctuate with over $300 billion in
market value.
 Stocks were affected throughout Europe and Asia while the dollar
reduced in value against other currencies.
 Simultaneously depreciation in the commercial real estate’s prices.
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20. Conclusion
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21. Largest bankruptcies of all time
Position Bank
Bankruptcy
filing
Assets
1. Lehman Brothers Sept.15, 2008 $691 billion
2. Washington Mutual Sept. 26, 2008 $327.9 billion
3. WorldCom July 21, 2002 $103.9 billion
4. General Motors June 1, 2009 $91 billion
5. CIT Group Nov. 1, 2009 $80.4 billion
6. Enron Dec. 2, 2001 $65.5 billion
7. Conseco Dec. 17, 2002 $61.3 billion
8. MF Global Holdings Oct. 31, 2011 $40.5 billion
9. Chrysler April 30, 2009 $39.3 billion
10. Thornburg Mortgage May 1, 2009 $36.5 billion
http://www.futuresmag.com/2011/11/03/top-10-largest-bankruptcies-of-all-time-
slideshow?t=financials
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Fatih Aydogdu - Cengizhan Bolat

23. 2 weeks before the bankruptcy
“.. our firm is strong today
and we will emerge from this cycle even stronger.
We done it before and we will do it again…”

24. “ Lehman's bankruptcy occurred in the midst of a
global financial crisis and was not caused by any
accounting issues”

25. Thank you
Fatih Aydogdu - Cengizhan Bolat