The Lehman Panic — An Avoidable Crash

Robert Z. Aliber and Charles P. Kindleberger
Additional contact information
Robert Z. Aliber: University of Chicago
Charles P. Kindleberger: Massachusetts Institute of Technology

Chapter 14 in Manias, Panics, and Crashes, 2015, pp 313-339 from Palgrave Macmillan

Abstract: Abstract The bankruptcy of Lehman Brothers Holdings, the fourth largest US investment bank, in mid-September 2008 triggered the most severe financial panic and crash in a century. Lehman had been an aggressive buyer of mortgage-related securities; the firm used the money that it obtained from selling its own short term IOUs to buy long-term mortgages. Every investment bank is highly leveraged, but Lehman was at the extreme end of the spectrum in terms of its leverage; its assets were more than thirty times its capital. At times, Lehman’s leverage may have been as much as forty times its capital; at the end of each quarter, Lehman engaged in ‘window dressing’ so that its reported leverage appeared smaller than the leverage that it had had in the previous several months.

Date: 2015
References: Add references at CitEc
Citations:

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:pal:palchp:978-1-137-52574-1_15

Ordering information: This item can be ordered from
http://www.palgrave.com/9781137525741

DOI: 10.1007/978-1-137-52574-1_15

Access Statistics for this chapter

More chapters in Palgrave Macmillan Books from Palgrave Macmillan
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().