Lehman Brothers Essay

Lehman Brothers Essay

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Lehman Brothers
On September 10, 2008, Lehman Brothers announced the lowest decline as the shares dropped to 45%. It left the market value at $5.4 billion after the Korea Development Bank rejected to make an investment deal that could rescue Lehman. The company would seek capital from other investors in order to recover their financial situation. These efforts faltered and the situation grew more severe, even after the US government had already saved the Bear Stearns and Fannie Mae and Freddie Mac. Though it is less likely that the US government will keep Lehman's bailout, there should be a resolution from the Federal Reserve System to bolster Lehman’s finance so as to prevent the US economic declination.

II Problems and Implications
Lehman Brothers is one of the four big investment banks with, 24,700 employees around the world. For 157 years they survived the economy crisis, until recently when they found themselves in debt after the sub-prime mortgages crisis
Lehman who once reached the peak of $84 per share had the share value gradually fallen from summer of 2007. After having an unsuccessful negotiation with the Korea Development Bank, Lehman faced the lowest dropping value of $14.15 per share on September 8. The share suddenly became half dropping value of $7.79 a day after. To bolster its financial status, Lehman kept on seeking potential suitors, to rescue the company. Two of them include: Bank of America and Barclay. However, these institutions need a guarantee from the Federal Reserve on a part of Lehman’s troubled assets.
It is not going to be easy for Lehman to be rescued by the US Government since the US Government has already provided aids to Bear Stearns, another collapsed bank, and just saved Freddie Ma...


... middle of paper ...


...izens may find it harder to get the bank loan; the government should lower the interest rates to stimulate the investments.
Talking points
- Assure the Idaho citizens that the government will not raise the tax rates and spend taxpayers’ money to support failed personal business
- Encourage the business investors in Idaho to diversify their investments in several banks to lower the risk
- Stimulate the investments and spending in Idaho by offering the low interest rates

Graphic Aids
The decline of Lehman’s share price in one year (Sep 2007 – Sep 2008)

Source: http://topics.nytimes.com/top/news/business/companies/lehman_brothers_holdings_inc/index.html?scp=1-spot&sq=lehman&st=cse

Source:
“Lehman Faces Mounting Pressures.” The Wall Street Journal. 10 September 2008: A1, A11.
“Lehman Lurches Into End Game.” The Wall Street Journal 10 September 2008: C20.

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