The Lehman Brothers

The Lehman Brothers

Lehman brothers surely come a long way from its origins in 1844 when two brothers, Emanuel and Hendry Lehman created the company as a general store. Lehman brother started to grow through the capitalization of high cotton prices, which saw its growth explode tremendously. The firm prospered over the following decades as the U.S. the economy grew, making it the fourth biggest investment bank in the United States. The Lehman Brothers were doing business in investment banking, equity and fixed-income sales and trading (especially U.S. Treasury securities), research, investment management, private equity, and private banking.

The Lehman brothers were challenged a number of times due to a several downturns in the country. The railroad bankruptcies of the 1800s, the Great Depression of the 1930s, two world wars, a capital shortage when it was spun off by American Express in 1994, and the Long Term Capital Management collapse and Russian debt default of 1998. Moreover, the Lehman brothers also were victims of the terrorist attack on September 11, 2001 when the building got a direct hit destroying their office and killing one employee.

After many years of success and recoveries, the Lehman brother was strangled by a massive credit crisis and fast dropping real estate prices and on September 15, 2008, the huge investment bank in the United States, the Lehman Brothers filed for bankruptcy protection under Chapter 11 making it the largest bankruptcy filing in the history of U.S.

The collapse of the U.S. real estate market eventually brought Lehman Brothers to its end, as its reckless decision into the subprime mortgage market proved to be a terrible idea. In 2005 and 2006, Lehman was the biggest company issuing securities based on subprime mortgages and by 2007, several lawsuits had been filed against Lehman for letting unqualified borrowers to take on loans they could not afford.

Lehman's collapse was a significant event that greatly made...