The Lehman Brothers Bankruptcy

Many companies around the world are affected by bankruptcy at some point in the fiscal year. Once the company is declared bankrupt, the company can no longer invest in the stock exchanges. The government announced that the company was bankrupt. Examples of such companies are Lehman Brothers, bankruptcy housing and real estate companies in 2008. The following is a visual aid of the events that affect the bankruptcy of the company. This later influenced the company, the company declared itself bankrupt.

In 2008, Lehman Brothers went bankrupt. Lehman Brothers' bankruptcy declaration is the largest in history, with assets of $ 639 billion and debt of $ 61.9 billion. Due to the availability of Lehman Brothers' transaction records, regulators can use intelligent data mining and machine learning tools to track transaction activity anomalies and differences in counterparty risk, widening credit spreads and short-term funding activities You can identify confusion. The capital market will decide early on the decline of Lehman's reputation and will reevaluate Lehman Brothers' CDS risk and therefore will play a natural role in Lehman's business expansion. Increase incentives by other companies such as Bear Stearns, Merrill Lynch, Citibank and others to lower CDS to raise borrowing costs, thereby increasing borrowing costs, ie by promoting profitability and creating shareholder wealth To do.

This report examines the bankruptcy of Lehman Brothers, the reasons for bankruptcy, the convicted party, the impact on the bankruptcy market, and the risk management error associated with bankruptcy. Moreover, the opinion part of this paper answers this question "Can we prevent bankruptcy?" In other words, on September 15, 2008, Lehman Brothers applied for bankruptcy. This is the biggest bankruptcy application in US history. For several reasons Lehman went bankrupt. But the most important thing is the investment bank's exposure to the subprime mortgage market. Due to deregulation and mistakes in risk management, Lehman Brothers was able to increase its exposure. Lehman's CEO, Richard Fuld, Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke are the causes. Mr. Fuld is responsible for creating risk-based compensation culture based on short-term performance. Henry Paulson and Bernanke may have saved the bank and may have chosen not to do so.