Global Financial Crisis The Fall Of Lehman Brothers

Global banks indeed play crucial roles in keeping the global economic growth in track. The fall of Lehman Brothers in 2008 as the major factor for the economic downturns leading to the Global Financial Crisis, or 2008 financial crisis, proves this point. Started from the irresponsible handling of mortgages of consumers, the prices of houses in America sank. Interest rates fell while capital ratios became lax. It was a case of impending Great Depression. Given its role of lending funds and providing technical assistance, IMF extended its help to adversely affected countries of the 2008 financial crisis. When the crisis escalated, a new short-term lending facility (SLF) was launched with an initial budget of $100 million to fund the economies of Brazil, Korea, Mexico and Singapore that were heavily damaged by the collapse (Truman, 2009). The creation of this program allowed these emerging economies to recover from the shock and sustain the other financial institutions in these countrie s. If the IMF did not adjust its borrowing arrangements, these countries may not be performing very well as they are today. Meanwhile, for the remaining member countries, the IMF also extended its dollar credit so much that the amount they lent doubled that year. Meanwhile, since IMF also hold deliberative forums, the organization suggested economic stimulus programs that would spike growth. Countries that are capable of carrying additional foreign debt were encouraged to increase their debtShow MoreRelatedThe Collapse Of The Lehman Brothers1638 Words   |  7 PagesThe global financial crisis of 2008 that reeked havoc on most of the financial institutions had them fall into liquidation and bankruptcy. One of the most popular and most debated incident was the failure of the Lehman Brothers. The Lehman Brothers were a leading US investment bank that was worth $600 billion (D’Arcy). The global financial crisis prompted Lehman Brothers to close its leading subprime lender (BNC Mortages) in 23 locations (). The closing of these locations were so aggressive thatRead MoreFinancial Management And Financial Crisis1404 Words   |  6 PagesSince the financial crisis is the value of financial institutions or assets in one country or several countries drops rapidly, and it can affect the stability and development of the relevant country or region even the world economic. The causes of this situation should be well studied to prevent the recurrence. 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With $639 billion in assets and $619 billion in debt, Lehman s bankruptcy filing was the largest in history, as its assets far surpassed those of previous bankrupt giants such as WorldCom and Enron. Lehman was the fourth-largest U.S. investment bank at the time of its collapse, with 25,000 employees worldwide. The consequences for the world economy were extreme. Lehman’s fall contributed to a lossRead MoreFinancial Crisis And The Collapse Of The Lehman Brothers2206 Words   |  9 Pagesundergo a financial crisis. Once in a while, it must find it hard to balance its books of accounts. If the situation gets severe, then the organization may even close down. This paper will give a detailed review of one institution -The Lehman Brothers - whose financial crisis led to its fall (Wong Smith, 2010). It will examine the beginning, the end, and the outcomes of the same. 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Who was involved? What caused one of the largest banking institutions in history to fail? What could have been done differently? These are a few of the questions I’d like to address in the next few pages. In the Fall of 2008 things were starting to look bad for LehmanRead MoreThe Collapse of Lehman Brothers1138 Words   |  5 Pages2008, Lehman Brothers filed for  bankruptcy. With $639 billion in assets and $619 billion in debt, Lehman s bankruptcy filing was the largest in history, as its assets far surpassed those of previous bankrupt giants such as  WorldCom  and  Enron. Lehman was the fourth-largest U.S. investment bank at the time of its collapse, with 25,000 employees worldwide. Lehman s demise also made it the largest victim, of the U.S.  subprime mortgage-induced financial crisis that swept through global financial markets