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Opinion

In Remembrance of Lehman Brothers

By Paul H. Tice

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The first Lehman lesson should be an obvious one: in the modern age of integrated global finance, the bankruptcy of a major investment bank can never be orderly, much less therapeutic for the markets.

Lehman Brothers, the fourth largest U.S. investment bank, filed for bankruptcy protection on September 15, 2008 to send a message to the markets.  Eight years later, we are still struggling to decode the message and draw the proper lessons from that catastrophic event.
 
Much has been written and said about the bankruptcy of Lehman Brothers over the intervening years, including government inquiries, forensic reports and countless case studies. Yet for all this accumulated body of work, we still seem to be missing some of the basic take-away points.
 
The first Lehman lesson should be an obvious one: in the modern age of integrated global finance, the bankruptcy of a major investment bank can never be orderly, much less therapeutic for the markets.  Lehman Brothers still ranks as the largest U.S. corporate bankruptcy to date, with $613 billion of total liabilities reported when it filed Chapter 11.  When the firm collapsed, it touched off a global financial crisis, seized up credit markets worldwide and deepened an already-gathering U.S. recession. 
 
Read the full article as published on Banks and Markets.

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Paul Tice is an Executive-in-Residence.