Lehman Brothers: How this Bank started the Economic Crisis of 2008 | Inside the Storm | FD Finance
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- Опубликовано: 29 авг 2024
- Rise and Fall of Lehman Brothers | FD Finance
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In September 2008, the collapse of Lehman Brothers was the biggest bankruptcy in history that sent shockwaves throughout the global financial market. Inside The Storm: Lessons from the Boardroom tells the story of what went wrong within America’s oldest investment bank and how it devastated even the common people living in Asia.
Big businesses rise and fall every day. This documentary series follows the lifecycle of four of the biggest industry players, and reveals intimate details on how these companies were run. Supplemented by interviews from industry players and professionals from around the world, this series tells the story of how these titans of business did not heed the warning bells, and fell from their ivory towers.
Inside The Storm: Lessons From The Boardroom documents the life and death of major companies that the world assumed would last forever. Eastman Kodak, the camera and film manufacturer that made photography available for common man, Kingfisher Airlines, the progeny of billionaire liquor baron Vijay Mallya, Barings Bank, hailed as Britain’s oldest merchant bank and the Queen’s bank, and Lehman Brothers, an investment bank that survived two World Wars and the Great Depression.
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Real Talk... It took me about 10 yrs to bounce back from this crisis. Thanks Lehman Brothers !!!
it wasnt just them. it was all big banks
I haven't recovered, and won't be able to retire. Yet, if I storm the capital building like the MAGA idiots, I will get arrested..... Where as those idiots are called patriots
I was 27yo, lost 75% of my savings trading stocks and eventually bounced back, although my life would've been totally different to what it is now had that not happened - which is impossible... if it wasn't Lehman, it'd have been some other bank anyway.
And what really made me bounce back was being young and being fortunate to have chosen tech for a career. That took me from Sao Paulo to London. I appreciate dozens if not hundreds of millions never bounced back, see the following European crisis, Arab spring and many developments that happened afterwards and were likely ignited by the GFC.
@@AShigahonestly some economies had JUST recovered from 2008 when Covid hit
I graduated from university in spring of 08. I had to join the Peace Corps to make it though (which ended up being a great decision anyway).
Took me years to come back stateside when things finally improved enough.
It was a very bad decision to remove the Glass-Steagall Act in the late 1990s, which led to the spectacular failure of huge banks during the financial crisis of 2007-2008. To prevent another disaster, Dodd-Frank and this statute both need to be reestablished right away. What happened with these banks is only the beginning of what will happen if nothing is done to address the current situation.
In my opinion, some of the banks was attempting to restructure their bond portfolio, which involved selling their low-yielding bonds despite the potential loss, and compensating for it by buying higher-interest-rate bonds on the open market.
Despite the economy's resilience thus far, the banks scenario cautions that the effects of Federal Reserve rate hikes persist. During such periods, investors must remain alert to anticipate what comes next. It is not necessary to act on every prediction, so I recommend seeking the guidance of a financial advisor, which has been my go-to advice for some time now.
I'm intrigued by your experience. Could you possibly recommend a trustworthy advisor you've consulted with?
‘’Aileen Gertrude Tippy’’ is her name. She is regarded as a genius in her area and works for Empower Financial Services. She’s quite known in her field, look-her up.
Thanks a lot for this suggestion. I needed this myself, I looked her up, and I have sent her an email. I hope she gets back to me soon.
Yet he still got all his money. What a joke that none of them went to prison. Again, shows you if you donate enough money to BOTH parties, you’re protected.
one of the things about capitalism is that the winner of the game gets special rules. Its just the way it is, not bad or good but just the way it is
They should all be in prison for life
@@mattverville9227its bad, stop being a kissass.
Monopoly irl
Obama let the Wall Street bankers off Scot free. He was in office then
"...aaaannd it's gone!"
-South Park banker, Lehman Brothers CEO.
Stan was like" TF????"😂😂😂😂😂
Now known as The Bank Of Evil.
Uh what?
Its gone. Its all gone.
This video didn’t explain why Lehman had that much debt. It was because they sold insurance on those sub prime mortgage bonds. They basically took a long position on housing.
They bought subprime mortgages and derivatives with borrowed money up 30:1, borrowed vs owned money. With the value of the underlying assets (the mortgages) dropping, it becomes obvious that you can no longer pay your debt since it’s not covered by the same value in assets.
watch the movie margin call and that will answer your question. They were buying mortgage backed securities...holding them on their books too long where they would lose value which caused loses larger than the market cap of the entire company since people couldn't pay their mortgages. They were borrowing money they never had.
The banks weren't making money. They were just taking it from pension funds and other investors, via fees. They were also taking it from borrowers in the form of higher rates. The banks didn't actually create value in the economy, they are a net negative. A company that takes raw materials, and manufacturers equipment which is used in construction, adds value to the economy. The bank which charges fees saps value.
It is a superb video giving viewers a throwback to the what triggered the 2008 financial crash. Hedge fund investors were piling an astronomical amount of money into investment banks' bubbles which culminated in 2008.
its not even their video! It was poached from RUclips and then uploaded as genuine content 🤣😂
These companies never should have had the ability to make so much risk that the entire global financial system was put into danger. Rich CEOs get to play at this game and it's the average person who loses their home, their job, their savings.
It’s rich ⚪️men who don’t give a flying efff.
It’s even worse now. Archegos was a small fish in a vast ocean. Brooksley Born should have been listened to.
If our government wants our trust back they need to bank rup all ceos take money back sadly will never happen and sadly the government will never regain our trust
Si.financiamos..aún.yo.tanbien.pérdi.dimero.haý..en.inbercion.y.fueron.40.0000.millones.okey
Thus we have the Trumps of the world
I was a homeowner during That time, i couldn't figure out how the housing market was booming during a recession.
It turned out to be a house of cards
I would compare the housing market being built on quicksand
🤣😂 The recession didn't start until AFTER this you dolt! It really didn't even turn out to be a house of cards. People didn't want to go to work so Obama gave them extra unemployment... And those clowns were not making $300/week in benefits. The government paid these clowns to blow up the economy in an effort to get Obama elected by making Bush look like he couldn't handle the situation...
There were home builders that just stopped. Countless home's stopped in mid construction.
It was crazy. I was a framer and was informed all construction was halted.
In 2008, the CFO of the company I worked for gave a presentation at a quarterly employee meeting. He said the economy was bad in 2008 and would be worse in 2009. Based on that, I sold off riskier investments. In the years I worked for this company, the CEOs were very accurate with their economic projections.
The corporate guys didn’t care about the common man. The same is still going on, even congressional leaders don’t care
It's called Capitalism
@@kmakiable im not sure capitalism is truly to blame, more like corruption and greed.
@@chenzen4915 Corruption and Greed are inherent in Capitalism.
@@kmakiable Greed and Corruption are inherent in every form of government, the only commonality is people in power taking advantage of everything.
Lawyers and bankers suck ballz
Actually, the deflation of realty assets caused the crisis. Every bank had to record unrealized losses that made them less and less liquid. Everyone thought mortgages must be safe because it’s the bedrock of the so-called American Dream, but they started making derivatives based on this idea without looking at the default numbers. Lehmann just became the sacrificial lamb because it was so badly leveraged, but if not them then it wouldve been Meryll Lynch or Citibank and the contagion effect would’ve been more or less the same. No players messed up in 2008, the game itself was rotten…
Yes, yes, and yes. When low interest ARM's were being advertised on every TV station, billboard, and internet site in the early to mid 2000's I turned to a friend and said "This is not going to end well." When the crash happened she turned to me and said "You were right, you predicted this years ago." I replied "I'm no financial genius but I do know human nature." Greed and the promise of the American Dream to people without the means to sustain a huge increase in interest rates leads to disaster. I cautioned a couple of people about the ARM's but was dismissed.
@@kk33613 The other side of the issue with low interest is builders constructed bigger and bigger houses, ramping up home values.
*real assets
@@hannah60000 I’m aware. The first blip on the screen was in Iceland. I’m not so America-centric. I don’t watch much American TV or news. I mostly watch European, British, and Australian TV shows and news.
I still called it though.
BTW what happened to your previous reply to me? Did you delete it? Maybe decide you don’t know me well enough to call me out? I’ll wait for your response.
Of course if you cannot afford repayments and had to sell, prices will fall.
I believe it's called supply & demand.
The executives didn’t lose money. The people did. People lost money, cars, homes, and ultimately lives and banks didn’t care. Thank God that He will judge and won’t let them get away.
Who is righteous judge?
God doesn’t care what money was lost. The bankers got off scott free. Thats it. The end.
This CEO bankrupted a 150 year old company with risky investments
@@gregorylyon1004 investments THEY created. CDO’s were an invention of investment banks.
No banka should have been bailed out. The bailouts should have gone to small businesses and individuals affected by their greed. All the c suite and senior execs involved should have been locked up for life. Instead, we simply kicked the credit ball down the road and now sit on the edge of another collapse.
Oh Fulds, the man who showed no remorse at his congressional hearing.
Hope his next sh1t is a hedgehog
... why should he remourse ...? He executed the policy of the political elite and those deplorables who elected this elite ...
The hearing didn't matter. He walked away Scot free
Imagine if you had shorted Lehman Brothers.
People did and made billions of the back of it
@@gwarne2304 how did they knew? That sounds amazing a great opportunity but how they knew???
Watch "The Big Short"
That's the thing...if you go short, there is no guarantee that you will actually get paid. You would have to offload and find a buyer before the eventual failure. If you stayed short on the entire horizon when it fails...well, you're me going to have to make capital calls with a company that is effectively dead :I
9:23 It is probably better if they left the intro out for Chris. Being an advisor for those banks is not something you want to boast about given that those banks needed a bailout
In the good time, you can ask a dog to invest your money and you will still make a profit
😂
So true
This isn't that tho
@@tomlxyzit is exactly that.. over leverage on speculation.. it's okay when things are going up and up but when things goes down the drain, unrealized losses becomes realize
Ppl blame the printing of money for our economic problem. The fact is, the whole loan and credit system is the true problem. Right now, it's what's causing our unbearable unaffordable inflation.
yes 'printing of money' is an old fashioned concept that most people still believe is how the supply is created, whereas it's 'loans' from thin air that are created through signatures that are the 'money supply', residing on a digital/electronic ledger somewhere on a screen and not paper in a safe. This is then 'spent' into existence thus watering down the value of existing circulating 'money'.
Imagine getting this autistic over the definition of " printing money"
Imagine being this autistic over the definition of "printing money" lol.
Its weird how they make it out like people that worked at Lehman losing their jobs was part of the crisis, it wasnt. It was the people that lost their life savings, not these random jobs people lost. You can easily get another job, you cant get your life savings back.
In England, we have something called rhyming slang. It doesn't take much to come up with something suitable for the word 'bankers'
Merchants
Great documentary! I lived though it myself!
I got out of the military in 2008. I got out of the Marines into an economy in utter chaos.
What about the rating agencies, Congress and AIG?
I can almost assure you that banks haven't learned a thing and are doing the same thing. Its only a matter of time before this happen again
Nunca en este reportaje se dice la palabra ROBO, DESFALCO, ATRACO. lo mas grave que dijeron de estos gargolas fue la palabra Arrogancia.
Es que no es un robo, fue una irresponsabilidad tremenda.
@@luigi3111 En el fondo sabian lo que hacian y les valia nd, decir robo es quedarse cortos.
@@luigi3111Irresponsabilidad es tu comentario, por mentslidades como la tuya, estamos como estamos en este planeta, yo vivi algo muy parecido en Ecuador en el 2000; es algo premeditado, calculado, una manera de hacerse más rico, a costillas del ahorrista, tal cual una droga al que le subes la dosis poco a poco, piensas que no tendrá consecuencias, miles se quedaron sin trabajo, sin poder comprar nada, migraciones, se cambió la moneda.. Y lo mas ironico, es que 20 años después uno de estos infelices banqueros fue presidente y lo votan porque no se conformó con su fortuna, comenzó a lavar dinero y a proteger a las mafias, mientras esas mafias mataban en las calles todos los dias como a perros, a ese mismo pueblo que lo eligió.
@@javso2 Bueno man, básicamente tu posición en contra de la dolarización teniendo en cuenta el contexto de tu país es hasta criminal.
Es que no pueden decirlo porque la Reserva Federal tuvo su cuota de responsabilidad, tal como explico en mi comentario de arriba.
There were a lot more causes of the crisis that really all came together at the same time even though people were warning as far back as late 90s this was going to happen, but it wasn't just one thing. And this has happened before in the past in different ways and will happen again in the future. Really it was like a volcano, a lot of things were going on underground the signs were there but then the top blew and everyone saw it
There should have been zero bailouts
Unfortunately the lack of credit from banks was destroying businesses across the world. Without a bailout (which I also hated), we would have been in a depression within months (like 1929). The bailout was bad but the lack of prosecution of companies like the credit rating companies, Lehman and Washington Mutual was absolutely a crime. The US did make its money back with a profit from AIG but they had to sell off a large portion of their company.
The bailout was fine. But the lack of accountability for the big banks and stricter regulations and oversight that should have been immediately attached to it was terrible.
I agree 👍
The only people who would've actually suffered from that are us. The regular folks. Businessess, everybody who isn't rich. Not the CEOs. They bailed us out.
The taxpayers ALWAYS bail out big business..
The guy that claims “no one could have seen this coming” is so delusion that it’s comical.
You either be humble or get humbled. Ego needs to be in check in order to be able to make decisions and lead.
They didn’t get humbled, the same thing will happen just a different way
The profit motive, & thus capitalism, is based on greed. Ego, & sociopathy I would argue, are necessities to succeed in the US. The banks are neither humble nor honest. They do not care about working class people.
Note: 1% have 99% of the wealth, right? The incidence of sociopathy in the US? 1%..
CNBC's The Week That Shook The World, was fascinating.
My father investing $150k equivalent in Indian markets at that time... He got rewarded very well.
In a nutshell, people got greedy.
Got?? The system is built on greed. They were doing exactly what the system was designed to do: turn sweat into cash & take it from the folks who sweated..
Thanks. For the information.
Dr. Agarwal articulated the issues very well.
I'm glad he can smile when he was part of the problem.
Tremaine questions are market protection of the native business, what complainers called bailing out of big banking or protected
"Bank of Evil - Formerly Lehman Brothers" - Despicable Me 1
These companies are greedy.
They’ve always be greedy. Always will. What changed was deregulation.
People are greedy.
Most complex and costly bankruptcy ever
It is still hard for me to believe that books with that many figures went to zero without anyone knowing before it was too late.
those CDO's were rated AAA
Yes hard to believe that making outlandish commissions for absolutely no work would make you blind😂
@@1greenMitsi The ratings agencies didn't do their job of evaluating these CDO's. The entire system was fraudulent. The government printed a bunch of money and at some point the next collapse will be even bigger than that one since no one was punished for creating that situation in the first place.
Oh, they knew. They just had to unwind their own positions before revealing the truth.
Most of them escaped with losses, but still escaped.
The executives? Yeah, they cashed out and took their bonuses.
They cooked the books months before the collapse
the crisis did not start with Lehman Brothers. it stsrted in 2007 when all of the large investment bank were taking heavy losses. The cris really git going with the dmfailure of Bear Stearns in March 2008.
Bare sterns got bailed out
Crazy part is, this keeps happening. Lehman Brothers, Enron, Arthur Anderson, etc.
Why call it your house, when the real owner is the one who lends the money?
Fantastic film. The Big Short was a perfect movie about this.
Fitch Ratings, Standard & Poors, Moodys; credit rating agencies, defrauded millions of retired worker founds saying the lend mortgage where given to people with enough money to pay. It's crazy these 3 still operate.
I didn't hear anything about how these investment firms knew the government would bail them out when it imploded too.
Ran by an arrogant, rude,unpleasant man who thought he was infallible.
He wouldn't listen to his staff and paid the penalty
What penalty? Last I heard he still got to keep his 500 million bucks.
Amazing how today's CEOs take companies around for decades and ruin them for shareholders. Greed
All the banking sharks smelt blood in the water and went into a feeding frenzy.
... sharks follow instincts, but who poured the blood in the water?
Lehman fue el chivo expiatorio para jodernos hoy con esta crisis.
No basta con ser cuidadoso, los bancos necesitan ser regulados por el estado
What's the point of earning a lot of money?!?! You can only buy THE SAME THINGS THAT ARE AVAILABLE TO EVERYONE ELSE!
They must be regulated!
Looks like a giant ponzi scheme to me
Agree, mainly with Synthetic CDOs
It is a Ponzi scheme
Gracias por ser francos en señalar las fallas y errores que terminó en mas sufrimiento de los jovenes elistados. Lo cual los convierte en mas que heroes
Interesting how no one went to jail!
For what? This affected people's life, but eventually those were just bad business decisions.
@@robertgworek2497 Bad business decisions? Dude it was outright FRAUD! The banks knowingly sold SHITBAG prime home loans and packaged them with a few solid home loans...and labeled them all AAA. That's fraud. And the ratings agencies colluded by signing off on them as AAA knowing that they werent. That's FRAUD.
Millionaires don’t go to jail..
Tens of millions had their lives ruined by this.
@@Nick-ue7iw I agree and I think that this shouldn't be legal, but it is.
Criminals, the people baled out. The rest of us serfs declare
Bankruptcy
How to keep open deadweight as part of another business. The lesson of Argentina 's Allende's conglomerate.
This is exactly when I got my mortgage- with no money down! It was crazy
Was it possible to see the underlying loans before purchasing these MBS's? It seems that some people knew what was in them according to the Big Short.
It probably was, but it would involve going through thousands of mortgage contracts and doing a background check on all the borrowers. A task that even the rating agencies avoided.
too much trust in the system,
THE SAME PLAYERS ARE IN PLACE; THIS WILL HAPPEN AGAIN BECAUSE OF THESE FINANCIAL GENIUSES.
He brought the most needed confidence and alone saved the world.
No more bail outs!
What happened to letting the market decide?
Thanks
Think about this people when you look at what you pay your investment advisors. Its about time they get replaced by AI.
props to that guy for just saying he was wrong
The credit system should have never existed. I said what i said.
Minuto 9:24.- Lo que dice Chris Rubbock, es que los Bancos ofrecían casas con hipotecas con pagos más allá de las posibilidades de pago del futuro deudor hipotecario, ya que su salario (y sus futuros aumentos) NO alcanzarían a pagar las mensualidades hipotecarias (con sus incrementos , sobre todo a tasa variable), lo que provocaría, en algún tiempo, el impago por necesidad, dejando la deuda semi pagada y al Banco ya sin recibir pagos. Se engatuzaba, engañaba (previa ilusión de la casa mas alla de su posibilidad dalarial) al cliente, mediante la alteración que el empleado bancario le llenaba la solicitud del credito, diciendo, donde el cliente, ganaba más salario del verdadero. (Años 1980 y subsiguientes)
I lost my house and job. 😭
All it did was make different people billionaires!!!😂😂😂😂😂😂😂
5:15 this kind of explanation and diagram is used in various videos but still not very clear to me..
Who would buy these debts? If they have money to buy debts, why not use the money to pay off their mortgages?
Why bet on others making bets? And who decided the ratio 20:1 or whatever it was..
The poor will stay poor but why the banks collapse if it was working so well?
Infantile analysis
Interesting...
Lo más similar en tiempos recientes fueron los NFT'S, criptomonedas, etc. En donde el usuario común tampoco conoce esos productos, pero fueron influenciados y engañados para invertir con promesas de recuperar su inversión con altas ganancias
How is it possible...for a business to lose $613 billion dollars within a year?
Mismanagement, greed, and stupidity
Lehman Brothers proved that it is possible. LOL
Housing market will never fall like this again.
Canadian hindi investment group
The British Indian empire. Someone who looks like Dawn wells side. Foreign involvement.
Greed and no accountability = Failure
No. One. Went. To. Jail. And. Now. It's. Reflection. Is. All. Over. Society. Broken. Homes. And. Strained. Relationships. I. Never. Thought. These. Educated. Thieves. Could. Do. So. Much. Harm 😢😢
It is not emotional. An economic reason to get involve. Attack on the profit motive of business.
Blue collar builds it white collar destroys it.
And no things still haven't recovered from it
When banks lend out far more money than they have on deposit, any hiccup is the potential for disaster. Washington DC pushed Fanny Mae and Freddy Mac to underwrite mortgages for people that were not credit worthy. The banks just took advantage of that.
Whenever a bank says your money is safe, get it out as fast as you can
A different take. The exaggerated numbers may indicate that the problem they are reporting on is to take place in the future. The slow buildup of a crisis.
Creates no service or product, just makes money😅. Rotten people keeping a rotten type of business open.
Gracias a esto compre mi casa en 2012 en 150 mil dolares, esa casa haora vale casi medio millon de dolares!😊
The CEO should be in jail
Prison
La memoria es frágil. La historia se repite.
Great insight
This behavior is just human nature, we can't help ourselves if the opportunity presents itself.
They were trying to remove the American banks natural business to investment banks and if true sold to oversees involvement that the FDIC calls offshore banking.
So money really has no value to some and has plenty value to others
The ONLY thing that has value is labor. Money simply represents labor (& thus hours of one’s life).
All this happened when Houston was hit with Hurricane Ike. I had no electricity for 3 weeks. We had no idea what was going on and at that time, we would not have cared.
So glad I had a paid off house at that time!
Should have cashed it in and bought something at pennies at the dollar couple years later.
I bet not one of those working in Wall Street suffered an inch. The poor working class bailed them all out. It will happen again.
El banco no inició la crisis, fue el gobierno con sus leyes suaves permitió adquirir créditos hipotecarios a gente con bajos recursos sin un trabajo. No empezó con lehman, esto tiene una causa.
Excelente video
Too many people were overstating their income on their loan applications, and collectively they all defaulted.
Yes. Clearly, the fault lies with the sub-prime loan takers - they were the ones who willfully lied to the banks, and in doing so precipitated the entire crash. Certainly, it had nothing to do with predatory lending, unregulated markets, or investors counting on the government bailing them out when their boom went bust.
The mortgage brokers allowed all those people to overstate their income without doing the actual work which is to validate the information on those applications.
Excellent document
I worked there mostly a bunch of psychopaths.