when these loans became illiquid the firm went through a credit crunch which meant it couldn t pay its creditors lehman could no longer raise cash cheaply by issuing debt and issuing stock under such conditions led to share dilution and negative sentiment which caused its share price to fall meanwhile housing prices fell as buyers stayed on the sidelines because of market conditions and the inability to secure credit as a result the global financial system was under threat of collapse with the absence of any additional loans being made and the firm s significant threat of failure 1
the federal reserve bank of new york and several large investment u s banks met on sept 12 2008 to discuss an emergency liquidation of lehman in an attempt to stabilize the markets the goal was to avoid a costly government bailout such as the 25 billion loan the government made to bear stearns in march 2008 7 the discussions which involved a potential sale to bank of america and barclays failed vetoed by the bank of england and the u k financial services authority efforts by potential acquirers to secure federal intervention were also unsuccessful 8lehman brothers failure placed the subprime mortgage crisis prominently into the public eye and presaged the deepening of the great recession history of lehman brotherslehman brothers was established by henry lehman who emigrated from germany he opened a dry goods store in montgomery alabama in 1844 the store became known as lehman brothers with the arrival of his brothers emmanuel and mayer their operation quickly expanded from dry goods into cotton and other commodities trading 9the firm s operations shifted to new york in 1858 at that time the city became home to cotton and other commodities trading henry lehman was responsible for the first incarnation of the grocery and general store business while his brothers laid the groundwork for what would become a financial industry powerhouse 9over the next century and a half the company underwent numerous changes and engaged in several alliances and partnerships while the lehman brothers bankruptcy did not cause the great recession or even the subprime mortgage crisis its downfall triggered a massive selloff in the global markets lehman brothers was allowed to fail the repercussions were felt immediately and globally for instance the dow jones industrial average djia fell 500 points the same day that lehman declared bankruptcy its failure is regarded as a contributor to the great recession that followed 10lehman brothers todaylehman brothers assets real estate holdings and operations were sold off in a fire sale liquidation to repay investors within a month japanese bank nomura bought the firm s operations in the asia pacific region japan hong kong australia and also its investment banking and equities trading businesses in the middle east and europe 11 barclays purchased its north american investment banking and trading operations as well as its new york headquarters 12not only was lehman brothers mentioned but the firm s leadership at the time of its bankruptcy was portrayed in several financial themed movies since 2008 such as in margin call too big to fail and the big short the 2019 showtime series black monday is a dark comedy about a financial crisis the show features larry and lenny lehman two fictional siblings who were inspired by the real lehman brothers in 2016 erin montella former lehman chief financial officer cfo who resigned in 2008 published an autobiography full circle a memoir of leaning in too far and the journey back the book was about her experiences in the financial world 13most notably the lehman trilogy is a three act play by italian novelist and playwright stefano massini it follows the lives of three immigrant brothers from when they arrive in america and establish their dry goods business up through the collapse of the company in 2008 the production made its broadway debut in march of 2020 and performed briefly before the covid 19 pandemic and resumed performances in the fall of 2021 the production received universal critical acclaim and eight tony award nominations winning five awards including for best play best direction of a play for sam mendes and best actor in a play for simon russell beale 