Customer and Employee Losses in Lehman’s Bankruptcy

Erin Denison, Michael Fleming and Asani Sarkar

No 20190116, Liberty Street Economics from Federal Reserve Bank of New York

Abstract: In our second post on the Lehman bankruptcy, we discussed the cost to Lehman’s creditors from having their funds tied up in bankruptcy proceedings. In this post, we focus on losses to Lehman’s customers and employees from the destruction of firm-specific assets that could not be deployed as productively with other firms. Our conclusions are based in part on what happened after bankruptcy—whether, for example, customer accounts moved to other firms or employees found jobs elsewhere. While these costs are difficult to pin down, the analysis suggests that the most notable losses were borne by mutual funds that relied on Lehman’s specialized brokerage advice and firms that employed Lehman for its equity underwriting services.

Keywords: crisis; Bankruptcy; Lehman Brothers; customer employee losses (search for similar items in EconPapers)
JEL-codes: G33 (search for similar items in EconPapers)
Date: 2019-01-16
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