Lehman Brothers Holding Company, founded in 1850, is an investment bank and securities trading company headquartered in new york. The company is engaged in various financial services around the world, including securities trading, asset management, investment banking, private equity and real estate.
In 2008, the American real estate market collapsed, resulting in many mortgage defaults and falling house prices. Lehman Brothers is one of the important investment banks, which invested heavily in the real estate market and owned a large number of assets such as mortgage-backed securities (MBS) and derivatives.
But these assets depreciated rapidly after the collapse of the real estate market. Due to the huge debts in these balance sheets, the company was unable to repay its debts in the liquidity crisis, which eventually led to the bankruptcy of the company.
Event influence
The collapse of Lehman Brothers, an American financial giant, immediately triggered a violent turmoil in the global financial market. On September 15, Wall Street ushered in a veritable "Black Monday", US stocks plummeted, and the Dow Jones index hit its biggest single-day drop point and decline since the "9. 1 1" incident, and global stock markets also plummeted.
The Asia-Pacific stock market plunged in September 16, among which Japan, Hongkong, Taiwan Province Province and South Korea all fell more than 5%. The Australian stock market was also hit by the earthquake. The Australian dollar weakened at 16, and the stock market closed down more than 1.5%. However, in the long run, the biggest impact of Lehman Brothers bankruptcy on the world is that it further dampened people's confidence in the market and the future.
The subprime mortgage crisis broke out in the United States in 2007, which not only brought heavy losses to the United States, but also to the global economy. The bankruptcy of Lehman Brothers indicates that the crisis will further escalate and more large financial institutions will fall in this crisis. As the pillar of Wall Street, the collapse of the first-line investment bank declared that the core of the American financial system had been shaken, and the subprime mortgage crisis officially evolved into a global financial storm.