Short presentation on fall of the 4th biggest investment bank firm in United States during the period of financial crisis in 2008 which ultimately started recession in Unites States Of America and subsequent impact on whole world of economy.

1. Fall Of Lehman
Brothers
By Vishal Gawandar

2. Introduction
 Business overview & case
 Terminologies
 Factors lead to Lehman’s debacle
 Strategic failure
 Business restructuring

3. Business Overview
 Lehman was the fourth-largest investment
bank in the United State
 Founded in 1850 by three brothers named
Henry,Emanuel and Mayer
 Employee strength of 26,200
 On September 15, 2008, the firm filed
for Chapter 11 bankruptcy protection

4.  Loss making business houses can file for
bankruptcy under a federal bankruptcy court
 Debtor can layout plan or party in interest come
forward for any restructuring of business.
 Debtor have a right to
reject plan which
is being layout
Chapter 11 bankruptcy
protection

5. Subprime Mortage crisis
 Banking emergency that contributed to the U.S.
recession
 Triggered due to collapse of housing bubble
 Lenders were approving
mortgages based on
‘self-declared’ income,
or income that could not be
verified.
 Negative loan to value
mortages and attractive interest rates.

6. Factors lead to Lehman’s
debacle
 Lehman Brothers targeted an annual growth in
revenues of 15 %
 They shifted towards making money on long-
term investments
 Involvment in subprime loans and mortgages
 Lehmans went for accumulating $ 85 billion
portfolio of mortgage securities

7. Strategic Failure
 Restructured their leverage ration from 24:1 to
30:1
 In 2007 raised its firm wide risk limit from $2.3
billion to $ 3.3 billion & to $4 billion in 2008
 Dangerous compensation system

8. Business Restructuring
 In 2008 Mr.D.Faud, CEO stepped down and was
replaced by chief restructuring officer Brian
Marshal
 Bankruptcy case judge James Peck supervised
the case
 Barclays took its North America business for
$1.35 billion.
 Nomura Holding took Lehmans Asia-Pacific
business along with few businesses in Europe
and middle east.