September 16, 2008 saw the fall of the fourth largest investment bank in the US, Lehman Brothers. After rushing from pillar to post, writing to biggies like investment wizard Warren Buffet to several big banks of the US like Bank of America and getting a `Big No' for infusion of any funds in his company, CEO of beleaguered Lehman Brothers Richard Dick Fuld understood that now he could not save the iconic institution which was founded as a merchant bank way back in 1850. And finally on September 16, 2008 the board of Lehman Brothers declared that it intended to file for Chapter 11 of the US bankruptcy law with the United States Bankruptcy Court for the southern district of New York.
And this was the end of the 158-year-old institution which refused to buckle down the Great Depression of 1930 and successfully bore the shock of Long Term Capital Management (LTCM) in 1998. The unprecedented fall of the share price of Lehman Brothers by over 94% brought its value to a few cents (less than 20 cents) thereby telling the story of fall of an institution which, as per many, was due to happen since the demise of Bear Sterns early this year.
Nevertheless, the four big investment banks (Goldman Sachs, Morgan Stanley, Merrill Lynch and Lehman Brothers) boast of having generating more than $65 bn of pre-tax profit between 2002 and 2006 and account for about half of the revenues at the Wall Street's firms. But on the other side, the three giants Merrill, Lehman and Morgan Stanley have written down $74 bn of their holdings tied to home loans, commercial real estate and leveraged finance for companies during the past four quarters of 2007 and 2008. |
