The Collapse of Lehman Brothers - A Simple Overview
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- čas přidán 9. 09. 2024
- The Lehman Brothers bankruptcy is the largest one of all time and it helped spark the 2008 financial crisis. The subject can be a bit complex but given that it's such a historical event, I think it's worth learning about. In this video, I did my best to give a simple overview of the situation.
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Intro Made By - / @jombo1
I remember when I went to see Despicable me the Bank of Evil was formerly known as Lehman Brothers. I was the only one in the theater who laughed at that joke.
That was the only good joke in the entire franchise.
@@joshuajoe1419 actually the first movie was pretty good because Illumination didn’t know that they could put in no effort and break 32 records
@@FriendlyTume yeah, after that movie, Illumination basically turned into a money maker with no character
Nerd
@@FriendlyTume and
"Cotton was a big deal back then, especially in the South" might be the gravest understatement this channel has ever made
He ain't wrong, the South was one of the biggest exporters of cotton that Britain(sort of) sided with the Confederates as it effected their economy, and the Ottoman Empire showed much support for the Union since they were competing with the South over cotton.
*Cough 😒
@@flynn659 I think you missed the point my friend...it rhymes with bravery lol.
@@troy8763 What's wrong with Bakeries?
@@flynn659 They “effect” affect
I want an episode on the Company that Company Man get all his stock photos and B-roll footage from.
Bro fr
Pexels and unsplash
Shutterstock? No thanks man
Video blocks, most likely.
I cant watch these videos anymore because of the terrible stock footage. After 5 minutes I just shut it off. Its better to just listen.
I moved to NYC fresh out of high school and the first job I had there was working at a restaurant right across from Lehman Brothers that always had their executives in there. We knew they were going down from as early as February from hearing all the chitchat. It's crazy much 'the help' learns from just staying quiet and listening.
So did you buy puts?
I just want to warn everybody: it's ANTI-SEMITIC to criticize ANY BANK, INSURANCE INDUSTRY, FINANCIAL SERVICES, CASINOS, HOLLYWOOD OR WASHINGTON.
@@cinemaparadiso5402 oy vey
@@cinemaparadiso5402 BAHAHAH
@@cinemaparadiso5402 very funny, very true! i was always remember hearing - in washington you could say anything about anybody - but if you say anything negative about israel, you're career is over
My dad passed away during the same week all of this happened in September 2008. I remember watching the news and it was absolute chaos and pandemonium, plus the recession and lack of jobs. With the death of my dad at the same time, it felt like the whole world was crashing down. I was 16 years old, trying to find a job during a recession, everyone was poor, people were losing their homes, and I couldn’t even find a job at a fast food joint. What a depressing time period. (at least for me)
Glad you made it through man
@@khalilflier1538 I’m a woman but thank you I appreciate it. Definitely in a better place now.
I want to talk to You about this, can I have anything to contact You please.
@@bebop504 I can relate. To your name anyway
Wow what a time that must have been. Hope youve a less stressful life now.
Note to self: Don’t play Monopoly with Company Man.
Yo can i take that note with me. Autully i wanna see someone play monopoly with him.
he didn’t like it, we have a chance
I challenge him.
i prefer, uno
@@Itsbully06 I beat me dad 5 times in a row at bts uno
My favorite thing about the Lehman story that didn't get mentioned in that internal memos showed that when the crunch started and Bear-Stearns got bailed out, Lehman's executives response wasn't 'Oh, wow, these things are risky. We should protect ourselves before we get into bad shape!'. Instead, their reaction was 'If the Fed is going to bail out Bear-Stearns, which is tiny compared to us, they'll DEFINITELY bail us out. Let's buy more!!!!' Lehman Bros is Exhibit A as to why bailouts are ALWAYS bad ideas.
No bail outs, just let them fail.
If something is too big to fail it shouldn't be allowed to grow so big in the first place.
I'm not a fan of huge companies but if they don't get bailed out, lots of people would lose their jobs.
@@daviddl3926 It doesn't matter, companies are supposed to fail, it's creative destruction. Fired workers will then be employed by companies that have better management and didn't take bad risks.
@@daviddl3926 Well, Lehman WAS allowed to go bankrupt and it's pieces were (reluctantly) bought up by other banks. It's contracts were serviced by the purchasers. What I'm talking about is not bailing out Bear-Stearns which was small by comparison, would have been EVEN MORE EASILY bought by another concern but would have scared larger banks like Lehman into pulling out of their nose-dive.
But even GM was a case study in why NOT to bailout large companies. It got bailed out and then went bankrupt anyway. But despite going bankrupt, the mythological supply chain collapse that the disaster preachers warned of never materialized. In reality, companies can continue to operate under bankruptcy. The catastrophic outcomes of letting companies fail NEVER turns out to be as bad in reality as claimed. But the downside of signalling to every other company of similar size or larger that the taxpayer's checkbook is open and ready for business has both fiscal consequences and moral hazard.
I was also thinking that bailing out big companies is unfair for both the consumers and the competitors of that market. Because pretty much they're immune to failure if the government keeps bailing them out...
Imagine being a company SO HUGE that your bankruptcy causes recessions in the most powerful economies around the world, and the total collapse of many others...
Absolutely disgusting. These companies have no right to cause recessions that hit poor people the hardest through their stupid decision making. Banks should have tighter regulations.
Well this is a significant exaggeration. Lehman Brothers going under was certainly a very Infamous result part of the 2008 financial crisis/recession but absolutely not the thing that caused it or the major driver.
@@Laotzu.Goldbug other banks did the same
This company absolutely did not cause recession on its own, it was an industry-wide problem, and all of the firms were doing the exact same things which caused this huge crash, it was not one decision or two, it was a bunch of bad decisions across the whole industry that piled up over the years like influencing government to keep derivatives deregulated, giving risky house loans to people who have bad credit scores, etc. this is much bigger than one company. They made these decisions because it made them so much money short term.
Lehman Brothers is purposely being singled out and portrayed as a bad guy so all of you people who don't understand what happened can have someone to blame. And thats why the government didn't bale it out. In reality, the government itself was strongly prohibiting regulation of derivatives, not looking into risky loans and agencies that rated securities, and is to blame for the same amount as all of the other investment banks, the problem is that all the people who had the power to do something were paid off in hundreds of millions per person, so that's why nothing was done.
NVIDIA with a $3 TRILLION dollar market cap. Y’all better pray that company stays above water 😂😂
Since the beginning of the year, I have purchased a few equities, but nothing significant. Why am I being so unkind to this? The fact that others in my field make six figures per piece, nevertheless, motivates me to want to be the first member of my polygamous family to earn a million dollars. I am fully aware of the expense of working more to earn more money.
I experienced the same thing; within the year, my growing tech portfolio was completely destroyed.
You're not doing anything incorrectly; you simply lack the expertise to capitalize in a down market. Professionals with extensive expertise who must have witnessed the 2008 crisis are the only ones who may profit significantly during turbulent times like this.
@@lucid480 You may locate Julie Anne Hoover using a search engine, of course. But I'm not sure if I have authorization to talk about this. She received a lot of media attention in 2020. She manages my portfolio and serves as my mentor.
Scam thread
All the above "people" are scammers.
4:51 “by the turn of the (19th) century the cotton business wasn’t quite what it used to be” major understatement lol
Turn of the 20th, not 19th. 19th would be 1800s, 20th would be the 1900s.
I'll never forget being called to a last minute all hands meeting in 2007 just to tell us that we were being laid off in a few weeks. We knew it was coming because we monitored a website that tracked all of the other bank closures and we had just opened a branch only to be told that one would closing too.
Did you use to work for Lehman Brothers?
@@ginettep904 No, he worked for Pizza Hut. That's why he was commenting about being laid off on a video about the Lehman Brothers
@@RamenBowl2.0 🤣🤣🤣🤣🤣😅 good point!
:'( That's so sad.
Yeah, getting laid off sucks. Been there and done that...
Do the Dutch East India company! If you are gonna review the world's largest bankruptcy, you should review the world's first company, plus they invented the stock market!
they were the biggest slave traders to the american continent :( i hope he mentions it
bump
G E K O L O N I S E E R D
G E K O L O N I S E E R D
@@danilobaudelair incorrect, that was the West India Company. They actually were different companies.
I bought my house in 2007. I was a first-time homebuyer with no savings. Banks were throwing approvals at me for loans so high that my mortgage would of been 60% of my gross pay. I made the smart financial choice to buy something far, far less than I was "approved" for and I'm glad I did because I would of been one of the folks to default too when 2 years later the worth of my house was half what I paid for it. It was an insane time that took over 10 years to recuperate from
That's the exact same story as my own. Yeah, it took 10 years to break even, but I still have my home. I'm soooo glad that I paid attention to the math and didn't fall for the glitz at the time.
"By the turn of the century the cotton business wasn't quite what it used to be"
True, I feel like you are leaving out some context there though...
Lol right I’m like uhh.
White-Apologist Alex?
Economics Explained: Take a break.
Company Man: Look at me. I am the explainer now.
I've never heard someone explain the housing crisis so succinctly, go company man!
Go watch the movie...the big short
@@ginettep904 I've actually seen it, it's a good one! I more meant like I've never heard someone explain the whole ordeal so well in a matter of seconds. Go company man!
Thanks you very much. That was the whole reason I was apprehensive about making this video.
I agree 100%. I had read some things about the housing crisis but Company Man did a great synopsis.
@@companyman114 I don't here where you mentioned the government was forcing banks to approve many of the subprime loans.
Sounds like they put all their eggs in a very poorly made basket.
More then that, they essentially made the same mistake all those sub-prime mortgage buyers made. They took out loans they couldn't pay with the idea said loan would be less than the amount they gained. Talk about karma... The sad thing is we STILL see housing markets exploding in value now because people keep trying to use it as a get rich quick scheme. It's probably already due for another crash in certain states where the average wage absolutely cannot afford housing there.
@@setcheck67 Especially since a lot of younger people have been perpetually priced out of the housing market. Essentially taking the brunt of what is now _two_ major economic crashes has lasting effects.
@@MarsJenkar And the "best" part is that we younger people get to be told that we should stop complaining and just pull ourselves up by our bootstraps! Y'know, because outside circumstances don't ever prevent people from being successful. If you fail, it's on _you._ /s
@@MarsJenkar 4 major economic recessions. There was one in the early 1990s, another in the aftermath of 9/11, the 2008 one this video talks about, and the 2020 one caused by the disease CZcams won't let people say (and the pathetic government response to the disease).
@@MarsJenkar I'm trying to understand why anyone is expected to perpetually prop up a bubble.
In Japan, people call the 2008 financial crisis "Lehman shock".
That’s awesome.
probably more like "Rehman shocku"
Yep 😑
Boi.....
@@IgorDimitrov that made me laugh
Important aspect to note; AIG insured these subprime mortgages so that banks would have a safety net when investing in them. Problem was, AIG didn't have enough liquid assets to cover them all when many of the loans went into default. Lehman Brothers was one such a bank that had the rug pulled from under their feet when the safety net didn't catch everything.
The real estate industry crackdown clipped Evergrande's wings, stopped it taking on more debt and had the flow-on effect of forcing it to sell apartments at a discount so cash would continue rolling in.
Evergrande is worried it won't be able to sell apartments quickly enough to meet its debt repayments.
Real estate makes up a substantial share - more than a quarter - of China's economy, which is the second largest in the world.
@@goergejones6861 What is really happening to the world Economy? Economy crisis everywhere🤦♂️.
@@goergejones6861 Australian iron ore is exported to China to make steel, much of which is used for for construction, so a crash in property sales and apartment developments could hit our exports. The world needs to know this.
For context, the Department of Foreign Affairs and Trade says Australia exported almost $85 billion worth of iron ore and concentrates to China in 2019-20.
“The real estate market may have been overinflated.”
California enters chat
*Homeless rate angrily types*
I don’t know if this is the case though. Since California serves as the portal to large East Asian economies(China, Japan, South Korea, India) wouldn’t Californian real estate be highly valued. Especially since China, India, and South Korea are all growing economies.
@@jamesbaxter222 They are too highly valued, due to regulations, that basic housing could cost a lot. That's why people usually cant afford housing if they are not rich.
1 million, for the same house that here would cost 300k MAX in a nice area. When it’s $600 per sqft I think it’s a bit much.
Miami entered the chat
Lehman was huge. In 2013, I moved into an apartment complex that ended up getting sold a year or so later. The apartment complex was owned by Lehman and it took 6 or 7 years after they went bankrupt to sell off this asset.
That would be around 2015. I still own $100 of their stock. It's probably worthless by now.
That Monopoly metaphor was spot on, never thought of explaining it that way!
For a below average person in understanding such concepts, at the end of your explanation I was able to grasp a lot.
Not only that , but I also explained this to my colleagues , most of them were impressed.
"Cotton Farmers" is one way to call it I guess.
@Nigel Robinson, I see what you did there.
My sentiments exactly kinda disappointed how laissez faire he was about it but hey..
There was a whole thread about this particular subject that just up and magically disappeared. 👻
@@bilboswaggings1826 disappointed?? oh yea, he should have spent at least 10 minutes talking about slavery in the south...cause that's what this video is about...
@@jonusjonus9271 this thread isn't for you clearly enjoy your video
I've never even heard of Lehman Brothers. To think that they were this large while and I didn't even know about them.
Because you're peak poor.
@@_.Leo_. rude
Were you an adult in 2008?
@@funnyitworkedlasttime6611 I certainly wasn’t, so I didn’t know anything about money or finance
Tristan Samuel - Oh really, wow. That’s surprising. The collapse of Lehman Brothers was all over the news, so I’m surprised you’ve never heard of them. I enjoy watching the news, keeping up with politics, the economy, etc - so if you’re not a fan of that stuff, I can see how you can miss it.
If you’re interested in learning more about the Lehman Brothers, I would recommend watching a documentary called: “Inside Lehman Brothers” on Amazon Prime.
I would also recommend watching , “Inside Job” which is a documentary that covers the 2008 financial crisis. (And I love how MGMT is playing during the end credits.) You can rent Inside Job for $3.99 on Amazon Prime or on CZcams. Charles Ferguson, the director, has a few documentaries, that are good that you should check out.
You can also watch the documentary called “Too big to Fail” on HBO. It also takes a deeper dive into the 2008 financial crisis, that Lehman Brothers was a part of. You can watch it on Hulu, if you have HBO Max. Or if you have HBO on your cable subscription package.
Another documentary that I really love is this one: czcams.com/video/QozGSS7QY_U/video.html
I love documentaries. So I hope that helps! 🤍
Lehman Bros. acted a lot like Bain Capital in the 2000s, company man should do a video on Bain Capital, one of the worst companies that lead to multiple bankruptcies of retailers and restaurants!
Yeah that one. Do a video.
@@Starry_Night_Sky7455 I want him rip on Bain Capital and Sun Capital Partners, since they had people from Lehman Bros.
I can see it now. Bain Capital - Why They're Hated.
It seems that they're the "bain" (bane) of everyone's existence.
@@BiroZombie literally, that company has done so much damage to stores like Toys R Us, Gymboree, regional department stores, even iHeart Media!
This just proofs that anything can happen to anything, even if its a big thing.
Dr. Strange: I went forward in time... to view alternate futures. To see all the possible outcomes of the coming conflict.
Peter Quill: How many did you see?
Dr. Strange: Fourteen million six hundred and five.
Tony Stark: How many did we win?
Dr. Strange: ...One.
What is it with brother duos in business and major screw-ups?
Unless your name is Disney
If a young angry punk named Gavrilo Princip can shoot a prince and his wife and start all the mayhem and carnage that to this day that we are still reeling from I’m sure just about anything can bring down an empire.
And things can happen when other things happen at anytime for reasons!
At the time I worked for the bank that “took over” Lehmans operations in Europe (Nomura) - I was one of the first people onto the trading floor at their Bank Street offices in Canary Wharf. It looked like most of the traders had left in a big hurry actually ripping open most of the computers and removing the hard drives. Not sure if this was in an attempt to make it more difficult to “unpick” the portfolios or concerned at what Regulators might find ? Many of the traders doubled down and went to work for Lehman Brothers Administrators, who better to unwind a bank than the people who made the mess in the first place !
Interesting, still in the business?
I worked for LB in their Bank Street office. I was let go in the 2nd (of 3) round of redundancies, in the March (LiFo). I still work with a guy who was there until the end.
There were stories of people taking home the artwork hanging on the walls of the management floor.
There were lots of assets like Blackberrys that were not returned and Season ticket loans that were never paid back.
Mind you a lot of staff received annual bonuses in shares and so most staff lost 10s if not 100s of £1ks
I know a decent amount of investment bankers and that sounds like something far beyond their capabilities. That sounds to me like the move of someone higher up taking them all out to destroy them, as you say
I had an interview at Lehman HQ in NYC with their graphics department just a couple of months before all this happened. Talk about not getting a ticket on the Titanic.
If you would like this and haven't seen The Big Short then you're missing out
KAKAKAKAKAKAK this is wonderful! PRANK! It is terrible! I looked in the mirror and saw something UNPRETTY: my face. KAKAKAKAKAKA! But I am happy agayn because I have TWO HOT GIRLFRIENDS and I use them to get views on my videos! KAKAKAKAK!!! Good day, dear vito
Meh it was okay but full of agenda and political bias. Misleading at some points. Would not recommend for trying to educate yourself using Hollywood as the educator.
That movie is about how Batman got rich!
Great movie!
@@AxxLAfriku what rhe fu-
Virtual hugs to early squad
Ok
ty
Feel the love from here man. Love it.
thanks for hug
Virtual hugs are the only ones allowed these days.
funny that the company beat its competitors by dealing in risky industries and they ended up going down doing high risk business.
So the Bank of Evil started with the ”cotton industry”? Yeah, checks out.
My mother used to be an investment Banker. Nowadays she works at a commercial bank though.
After 2008 I (as a kid) didn't really understand what had happened.
She explained most of what led to the 2008 crises in a manner impressively understandable for a kid.
The Bank of Evil (Formerly Lehman Brothers)
Thought of that too lol
Goldman Sachs now has that crown
Literally profited from Slavery!
Ah, 2008. Another dumpster fire year like 2020.
get ready for a lot more of them lol
Imagine 2028
@@Umbrax9063 PANIK!
2008 and 2020 were the worst years in modern history since World War II.
2008 WAS PURE TRASH! I'll take 5 2020's over one 2008. It was THAT bad
Hands down one of the best business channels on CZcams. It's almost a crime that these videos are free.
"Cotton farmers" is a nice way to say slave owners
Slavery still exists today in China
James Lane in the middle east and Africa too. The kafala system is basically slavery. Hopefully one day they get up to speed on human rights
Many were Not, some were, Mr. Virtue Troll.
@@nyki7fykxtjxyi who cares about China were talking about the US
@@LondonWalkability Who cares about the US this about banks.
We're still waiting for the next video.
*CZcams - Why They're Hated*
The Big Short is one of my favorite movies and really tells 2008 in the light that it should be. Banks didn’t care and thought the train would go on forever, the government agencies that were supposed to oversee them didn’t, and then the middle class and poor people’s tax dollars bailed out the banks while losing their homes.
One of the biggest crimes that people seem to forget smh
Man I almost forgot this firm existed its been so long. I like vids like that is about older companies, keep up the good work.
I think you did a pretty decent job of explaining the process. I was working for a mortgage lender during the financial crisis and while I didn't understand everything that was happening, I saw its effects on our company firsthand. I didn't realize that Lehman Brothers was involved in the mortgages, but that's essentially the same thing that my company did.
Great video. I was working for another financial firm across the street from Lehman Brothers, and had a front row seat to the TV cameras and reporters that parked outside their building. Rumor was that our company was the biggest holder of Lehman stock. I think you can see where this is going. Everyone panicked. A month after Lehman fell, hundreds of people were let go, including me.
lehman brothers engaged in fraud and crimes on a large scale. there's nothing sad about a business like that going under, even if it was around since 1850.
SERIOUSLY. That remark bugged me. To shed a tear for an old school establishment company like this was really strange. I'd legit would rather feel bad for the woes of Walmart or Amazon than these people.
@@girlgreenivy I got a kick out of how he acted like it was an odd, random thing.
"Believe it or not but shockingly the southern US had a thing for cotton before the civil war. It sounds silly, I know. Like why might that even be, it's so strange and random."
@@AmateurContendr
I think it was on purpose. Just dry humor at its finest
There was no fraud or crimes. People call every single financial company's issues fraud sound like idiots.
They literally didn't do anything wrong other than trust the system.
@@AmateurContendr because a lot of people who had nothing to with fraud got screwed over ie worker and besides if you started a company and some dumbass successor ruined it all wouldnt you be pissed
The achilles heel: selling overhyped stuff to people who couldn't afford it and then being left with the cat in the bag.
I was too young at the time to really know about the Lehman Brothers or pay attention to what was happening in 2008, so imagine my surprise finding out they were so huge! Great video :]
You did very well in explaining "all of that".
"We had some really good models, we just didn't factor in greed and panic."
I went in knowing nothing and came out thinking I could give my two cents on the subject if it came up in casual conversation. So yeah, really good job explaining it.
You did an amazing job explaining the Lehman Brothers collapse by describing their sector exposure as well last the economic conditions that led to the asset bubble. Great job!
I would say though, that the situation was far worse than just "buying lots of houses, and houses went down in value". In fact, most of their assets weren't just in MBS, or real estate, but as the contract holders of CDS (Credit Default Swaps). That's just fancy wording for insurance on housing bonds. So what really blew them up, is that they were on the hook to pay the buyer of their insurance contract billions of dollars, on contracts that they sold for pennies on the dollar. It magnified their exposure far beyond what their stated exposure was, and simply was impossible to liquidate without a buyer for these "toxic assets". (the insurance contracts)
Well done. Just one suggestion: you should have added 2 minutes on how all of Wall Street was ‘in on the game” by paying handsome fees to credit rating agencies to ‘rate sub-prime MBS’s” much higher than they actually were. Also some investment banks were selling these mbs to their clients (with the inflated ratings and liberal assumptions in the analysis) while at the same time selling it in their prop books and prop trading desks ! This was going for months before the bubble burst.
This is the best analysis of the Lehman Bros collapse that I have seen that describes the events leading up to the collapse in a way that a non-financial expert can understand. Great Job!
The Big Short is a great movie to explain this period of mortgage lending. It's entertaining yet shows what happened leading up to the financial crisis.
Shortest analogy: They tried to juggle lawn darts and water balloons and got all wet as a result.
The fist week of September in 2008 I changed my RRSP (see 401K) from a conservative portfolio to aggressive and about three weeks later, when I lost a significant percentage of my retirement fund, I thought it was a disaster. But I left it and learned over time that investment brokers capitalize on difficult times and it turned out to be more fortunate for me in the long run. And 2020 has been another boon to my fortune when the Sock Rocket caught Covid-19 and my retirement fund took another roller-coaster ride.
Lehman Brothers always struck me as a title more appropriate for a chain of men's clothing stores.
I worked at Lehman from the early 90's (High School) in the mail-room when it was partnered with American Express. Than I went back to work for them after college 2001-08 in the IT department (I still have my ID badge ...LoL) . The trade floor was getting smaller and smaller after the saving and loan crisis. It even wiped out whole floors that was dedicated to real estate loans. In the final days some people had to be escorted out by security because they couldn't believe that the job they where at for years was suddenly over. Some of the people I worked with was phased into the Barclay's company that took over. All I can say is Dick Fuld the ceo was truly a dick. He came out of this fine with a golden parachute.
The 1 thing missing is how the Chairman Rick Fuld walked away with millions while seeing LB liquidate its assets and workers out of work? Happens time & time again corporate CEOs walked away with financial compensations bigger than thee savings many of us accumulated in 1 lifetime. Like Tony Hayward who walked away with millions after the BP disaster in the Gulf of Mexico that disrupted the lives of many fishermen.
I took out loans for college with Campus Door during the 2006-07 school year, and again for one semester in Fall 2007. They were owned by the Lehman Brothers, and if I remember right, my loans were switched to PNC when everything collapsed, and then finally ended at Wells Fargo.
Ah ha... so you are coming clean at last. Very noble good man. Well now we know that Jeremy here is THE domino which precipitated The Investment Banking's Disaster upon exposure of Fractional Leveraging mechanic which caused The Crash of The Real Estate Bundled Derivatives of 2008. You're a good man. for real. cheers:)
>Break the law and get paid for it!
I wish I was a bank.
This video just makes me want Company Man to review the movie The Big Short
Actually the real estate value didn't have to drop to break the pyramid,all that had to happen is for it not to keep going up so fast. So that "equity" in the houses didn't increase because of price appreciation. And so when the balloon came due the home "owner" wasn't able to refinance to a new balloon loan and reset the payment clock.
I went down the company man rabbit hole. Love these videos man
Hey, happy to hear it. Thanks Coach.
when you’re very early but cant think of anything to say 😔
Personally I just watch the video
Then dont say anything...
Just stfu then
yeah understandable i normally dont but might as well attempt at getting a comment that has more than 1 like :/
edit was fixing has, accidentally wrote had instead
Same
You forgot to talk about how through all of this Dick Fuld who was the CEO got over 300million in compensation while the company went bankrupt.
that's just standard fare for CEOs and other high management, while the lowest on the chain basically get fucked.
He sent everyone in the firm an e-mail telling them not to worry; that Lehman didn't hold that many MBS's or Derivatives. He then immediately took his golden parachute and took and early retirement. I knew at the time he was spreading B.S. because at the time my job required me to go through all the buys and sells of derivatives for the firm.
Never clicked on a CM video so fast.
Recently, in China, similar scenario happens in the real state market, thus I wanted to review the 2008 financial melting down. I deeply appreciate this video to explain that with full clear and concise.
From the standpoint of having spent 25 years in the "Trust Me, I have an Expensive Suit" Business, I commend you on the job you did with this.
Hope you're making copious notes for your upcoming coverage if the "Bitcoin Collapse".
(ps: got my entire Client List out of Lehman in the $70-$75 range in July '08.)
I would imagine this was a difficult episode to do. This is such a complicated thing that people still talk about and analyze. You did a fantastic job of making it informative but understandable.
Great job as always.
Thanks Bryson. I did my best with it.
You talk about them like they are a dear uncle who passed when in fact they knowingly screwed millions of people's futures
Their executives did it by being incompetent nincompoops. Why should that stain the legacy of those who actually helped others by being competent?
@Lego Yoda Only in the short term. It's called killing the golden goose and a clear sign of incompetency.
This is correct. Look up Principle Protected Structured Products. They sold them to old retirees as a safe investment. They can burn in hell.
He also left the government's role out entirely. It was Bill Clinton, Henry Cisneros, and Barney Frank that caused the huge bubble. Those three pushed the banks to make all those bad loans in the first place. Home ownership was treated like the holy grail at any cost.
@@violinhunter2 this is a common right wing talking point designed to deflect blame.
"cotton Farmers"
also know as slave owners
@@Alice-od3bw Not all of them. The big plantations of course required slave labor, but if you're trading cotton at a dry goods store, you were probably a small subsistence farmer that was just growing whatever could buy some beans to eat.
I was thinking, "He has to know, right?"
literally my thought too
@@Meton2526 required isn’t the right word
Good explanation of what happened. The problem was also compounded because the government rules allowed banks to be more highly leveraged in mortgage backed (MBS) products as it was seen as "safe" products... until it wasn't. The movie Margin Call is a good dramatization of what happened and is pretty accurate about how these banks run.
You did a very good job of explaining the history of *LEHMAN BROTHERS.*
I’ve been trying to understand the crisis for a while, and the monopoly analogy made it very clear.
I feel like this video painted the company in too much of a positive light.
Did you expect him to paint them in a negative light? It’s an objective business analysis, not a subjective moral review. I admit he missed details but he does mention that he prefers to do more overview-like commentary to keep the videos short. Which I disagree with, but whatever
@@ArnulfoSalgado My point is that the video wasn’t as objective as you suggest. For instance, he says: “it’s sad to see something so old go down like that” (2:43). That’s a subjective statement. Maybe it would be sad if the company helped society, but Lehman Brothers brought this on themselves, and regular people paid the price.
@@Ricky-ci4jx regular people did work in lehman brothers
Companies like Lehman Bros are essential. They provide liquidity to the marketplace.
It's called the HUMAN condition Ricky: and EVERYONE'S shyte stinks...
THANK YOU. I like videos that explain parts of the Great Recession, it’s a topic that I know very little about but would like to know more about
Having lived through the nightmare of that real estate devastation and the painful learning curve that came from it
you actually clarified the Lehman collapse a bit for me. I was not aware how deeply they were in in Real Estate.
History always repeats itself.
I think when covering 2008 it’s also important to mention how much to blame both the U.S. government and the Federal Reserve were to blame for everything that happened, as well as how the expectations created by both directly contributed to the poor decision making of Wall Street as a whole. Too often the issue gets painted as a sole result of corporate greed and bad management, and while that was a major issue, it didn’t occur in a vacuum.
The number you gave as their assets at the time of bankruptcy was totally fictional, and one of the reasons for the collapse. It was based on an older projection and that the market would continue to grow. In reality their assets were cash on hand and physical real estate outright owned by them that had also been greatly reduced in value.
I know you usually focus on one company at a time, but would you consider doing a video on the various bubbles, and their collapse, in recent times like the tech industry of the 90's and real estate in the early 2000's? Both have similar roots in being based around ignorance, hype and hysteria, not the actual value of the businesses or what they created.
I second this. It would be very educational to get a bigger picture view of panics and crashes as well as the bad accounting and bad assumptions (ie “real estate always goes up”) that underpin each.
"After 150 years of business, that's going to be their legacy." Ouch. True though.
It is crazy isn't it. That's the trouble when a company disappears, it is the end. Many businesses can fail miserably but as long as the lights stay on there is always hope and the story can continue.
Don't forget, they were one of the primary actors in the asset dump that crashed the economy. One of the greediest firms to ever exist.
You did a great job explaining their downfall. I clearly remember the 2008 financial debacle, and you pretty much nailed it.
2008 was also an election year; I'm wondering how much of an impact it made on voters to see a company like this go down.
That is why Obama won
“Cotton Farmers”
Who's here after Silicon Valley?
Edit: Not even 8 hours into having written this, and it is now given the title by CNBC as the "Biggest Bank Failure since 2008".... We are in the Economic Armegeddon, my friends...
Me yoo
This comment aged poorly, we did not in fact hit economic Armageddon, more like a granade explosion, still bad but manageable.
@@duitk There are two back-to-back quotes stated from a Shakespearian play I think of when I read this.
"The Ides of March have come."
"Ay, but not gone."
@@iangreer4585 maybe, we will see, people are always predicting economic Armageddon, oh it will happen eventually, some day, it always does. However for now, we are just stuck in economic mediocrity.
Same old story, all equity and no liquidity. Very well presented. Thank you.
From all the clips I’ve seen about the 08 crash you helped me understand it the best. Thank you
If you’ve never covered it, a good related story is the failure of WaMu later that week! Good recent book is “The Lost Bank’.
Chase later bought Washington Mutual following the worst economy since the Depression. Before that, it bought the Dime Savings Bank of New York. Remember them?
@@ckfinke7625 I didn't know about Dime bank. But I had an account at WaMu when it was confiscated by the Feds. That was a Thursday evening, and the Chase sign was installed by Monday.
I hated those stupid WaMu commercials that tried to be funny but were instead very annoying.
As a layperson who has read a couple books on the subject, I'd say you did a good job explaining. It's a big story and you pulled out the most important parts in a very understandable way. I don't think I've seen any other source mention how the company was originally started, so that was a nice touch.
One detail I think it would have been worth leaving in: the way the banks sliced up those subprime mortgages and obscured how bad an investment they actually were. Makes it hard to tell which investors honestly thought they were solid and which were just planning to toss the hot potato to another investor before it exploded.
Tip-toeing around saying saying the word 'slavery' was kind of comical. I understand you try to be uncontroversial as possible, but come on.
He probably did that so YT wouldn’t shadow the video
Money motivates everything, it’s why CZcams is so much worse.
If you understand so much then why are you questioning it? Let the man display his respect and sensitivity for a very real thing that some groups of people still experience to this day
My exact thought 😂😂 “he earned enough to buy slaves” is the actual storer
Great explanation!
Recommend to watch this before you watch The Big Short
Nice job simplifying/summarizing the collapse.
Not to mention that many of Lehman's loans would have been falsely rated as far higher than they actually were.
Big Short and Khan Academy explain this in more details. Pretty good and general explaination.
Ok so then they started off slavery
Using the product of it as currency, yep.
I've seen a few videos on the matter, but I never actually understood whatever they were talking about when it came to losses.
All I understood from those videos was "economists try to talk the CEO out of some sorta investment that was going bad, but CEO go 'hehehe, no', and went on to destroy the company as a result in 2008"
Your vid actually explaining what created/led to that was more accessible to people who don't have the strongest understanding/largest knowledge when it comes to economics, including me.
Good job!
Good summary. I like the bar graph comparing this with other bankruptcies. Wow.
Cotton farmer? Alabama? 1850s? So, lehman brother part of dark history of US, right?
Indeed