Lehman's Collapse - an insider's view
The 158-year-old Lehman filed for bankruptcy protection on Sept 15 2008, in the largest US bankruptcy filing in history, leaving the future of 25,000 staff in jeopardy and sending a financial tsunami across the globe that continues to reverberate today.
Lehman was heavily overleveraged at the top of the market in 2007 - its net tangible equity was US$17 billion (RM59.5 billion) but its total investment was US$750 billion (RM 2.62 trillion) - a good chunk of it in mortgage-backed securities that turned "toxic".
"Inside Lehman, some really weird things were going on ... the 31st floor was one of those mysterious places on Wall Street because we had incredibly talented risk-takers that were politically outmanoeuvred and squashed like grapes," said a fuming McDonald (once bond trader, now MD of Pangea Capital Management).
"They didn't just rule with an iron fist, they wore brass knuckles."
McDonald said the lessons from Lehman's collapse were important - "not just to warn of such disasters in the future but ultimately to provide a beacon to help us serve Main Street better"
- AFP
The Sun (Business), September 14, 2009
