9. The Scandal: Lehman Brothers Collapse
The players: Dick Fuld, Timothy Geithner, Hank Paulson.
The story: Lehman Brothers was a major buyer of sub-prime loans – aka toxic debt -- during the housing boom of the mid-2000s. Using an accounting trick, it "sold" much of this debt to Cayman Island entities -- agreeing to buy it back at a later date – in order to make its balance sheet look stronger than it was.
When housing values began to drop in 2007, Lehman was forced to disclose its losses, which rendered the company fiscally unsound. Treasury Secretary Hank Paulson and New York Federal Reserve President Tim Geithner arraigned a meeting with Lehman' Chairman Dick Fuld and the CEOs of other major banks in order to find a buyer for the company. When none could be found, the 158-year old company filed for bankruptcy.
The credentials: Lehman's bankruptcy – at $691 billion, the largest in U.S. history – is widely considered the cause of the 2008 financial crisis.
Fun fact: Lehman was such a global powerhouse that its collapse even effected the economy of countries like Iceland, Latvia and Pakistan.
The players: Dick Fuld, Timothy Geithner, Hank Paulson.
The story: Lehman Brothers was a major buyer of sub-prime loans – aka toxic debt -- during the housing boom of the mid-2000s. Using an accounting trick, it "sold" much of this debt to Cayman Island entities -- agreeing to buy it back at a later date – in order to make its balance sheet look stronger than it was.
When housing values began to drop in 2007, Lehman was forced to disclose its losses, which rendered the company fiscally unsound. Treasury Secretary Hank Paulson and New York Federal Reserve President Tim Geithner arraigned a meeting with Lehman' Chairman Dick Fuld and the CEOs of other major banks in order to find a buyer for the company. When none could be found, the 158-year old company filed for bankruptcy.
The credentials: Lehman's bankruptcy – at $691 billion, the largest in U.S. history – is widely considered the cause of the 2008 financial crisis.
Fun fact: Lehman was such a global powerhouse that its collapse even effected the economy of countries like Iceland, Latvia and Pakistan.
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