Protagonist Of The Documentary Of Banco Lehman Brothers

Protagonist of the documentary of Banco Lehman Brothers

Lehman Brothers was an investment and financial services bank, founded in 1850, as a family business that accepted gross cotton as payment, due to its high price, and transformed it to sell it. After overcoming the United States Civil War and the Crack of 29, this company expanded and covered various sectors such as the media, railroads ..

It was the 70s the rise of this entity. With the acquisition of Abraham & Co. And its subsequent fusion with Kuhn, Loeb & Co, is renamed Lehman Brothers, Kuhn, Loeb Inc, and thus enters the ranking of US investment banks, in fourth place.

Subsequently, in the 80s, they associated with American Express to solve their financial problems. At the beginning of the 21st century, his alliance with American Express ends and begins to endowed economic independence, thus creating Lehman Brothers Holding Inc.

To understand the facts that brought to bankruptcy a bank as important as this, it is necessary to take into account what happened in 2002 in the United States. At that time there is a decrease in the interest rates of money that banks lend to their customers, which caused many people to decide to buy a home. "According to George Bush, president of the USA. UU., The objective of this descent was that all Americans could own a home ”. The banks granted many credits asking few guarantees, their income, or their debts, their employment situation were not looked at.

These mortgages were called "garbage mortgages" or "subprime mortgages".

To this we must add that the banks took a new financial product, the CDO. These grouped diverse bank assets, including many "garbage mortgages", which made investors a great risk. The collection depended on the antiquity of the investor, in case of default they first charge the oldest and new investors are the first to have losses.

After a few years of boom of this type of mortgages, customers begin to not be able to pay the debts they had with the banks for the purchase of their home. Lehman Brothers had many titles that were attached to the "Subprime Mortgages" and not getting money from debtors, investors begin to lose their funds. The value of the bank in the stock market begins to plummet. In 2007 Lehman Brothers got its maximum stock market, when it broke, its value was 95% lower.

In this documentary, the situation in which the banking entity Lehman Brothers was narrated is narrated, the last days before its bankruptcy, on September 15, 2008 and all the negotiations that were carried out to try to save it. The two existing solutions, at that time to end this problem, were the purchase of said entity by one of these two banks: Bank of America or Barclays, or the rescue by the Federal Reserve.

Although throughout its history this entity had managed.

• Thomas theorem 

Thomas’s theorem points out that if people take a false as real situation, their consequences are also real, that is, it produces an action that makes the originally false idea become real.

The bankrupt. Due to the rumors and fears of the investors who wanted to withdraw their money and could not, this great catastrophe occurs.

This theorem is reflected, since due to the bankrupt. Therefore, due to an assumption or situation that could be false, a series of real and devastating consequences occurred.

Conclusions

Lehman Brothers was not the only culprit of this catastrophe, since many other entities also caused this real estate bubble to grow more and more. The origin of this disaster was the greed of bankers who had no scruples or moral values. His only purpose was to enrich themselves, even knowing that they did it using a series of illegal practices

On the other hand, the bankruptcy of Lehman Brothers was also influenced by the proud character of his CEO Richard Fuld and for his late decision to sell the company to other buyers in order to save it, all by ambition.

You also have to keep in mind that the US government. UU., The Federal Reserve, did nothing to save this great bank, dropped it without thinking about the consequences it would bring to citizens.