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单击此处编辑母版标题样式,单击此处编辑母版文本样式,第二级,第三级,第四级,第五级,2020/2/10,#,Big,but Still Failed,The Collapse of Lehman Brothers,L,EHMAN,B,ROTHERS,Once 4,th,Biggest Investment Bank,Fortune,:,Most Admired Securities Firm in,2007,American Dream of Over 150 Years History,Survived all the crises:1929,1987,1998,2000,Bankruptcy Protection:Sep,15,2008,Outline,Backgrounds,Causes of Lehmans Bankruptcy,External environment,Internal,mechanisms,Derivative,Abuse:,CDO CDS,High-leverage,strategy,Operation risks,Other reasons,Lessons,About,Lehman,Brothers,Founded in 1850,Investment,banking,equity and fixed-income sales and,trading,research,investment management,private equity,and private,banking,Specialized in fixed-income securities:,Lehman,Aggregate Bond,Index,About 40%revenue from,2000,to 2007,Aggressively expanded business,Background,Causes,Lessons,L,EHMAN,B,ROTHERS,In Millions of USD,In Millions of USD,Source:Google Finance,Background,Causes,Lessons,L,EHMAN,B,ROTHERS,Lehman,underestimated,the subprime crisis of 2007,C,ontinued mad,expansion in,2007,Great liquidity problems in 2008,Final struggle of Lehman Brothers,Issued securities to collect 14 billion dollars,Tried to find strategic investors,Turned down by U.S.Government on Sep 12,Filed for Chapter 11 on Sep 15,Jan:Emergency,interest rate cut,July:Met,BOA,Mar,:,Bear,Stearns,a,cquired by,J P Morgan,Apr:4 b convertible,stock;Stock+18%,Jun:,Met KDB,Aug:Met,MetLife,Sep 10:Barclays,offered,Aug:Remet KDB,Sep 12:Declined,by US Government,Sep:Bought by Barclays,and Nomura,Mar,:,Stock drop 20%,Jun:2.8b,quarterly Loss,Sep 25:File for,Chapter 11,L,EHMAN,B,ROTHERS,U,.S.subprime mortgage crisis,Soil:,U,.S.,financial,market,Seed:,U,.S.,MBS,market,Catalyst:U.S,.,housing,bubble,the,biggest and most,import,ant,external environment,Background,Causes:,External Environment,Lessons,The,Soil:,the U.S.financial,market,L,iberalization,L,iberalization,of interest rate and,businesses,B,reak,the boundar,y,between banking,and,securities industry,Mixed,operation,as,a trend,Securitization,The,process to securitize the poor-liquidity asset through,FE,Solve,d,the,root vulnerability of the banks,L,EHMAN,B,ROTHERS,Background,Causes:,External Environment,Lessons,The,Seed:,the U.S.MBS,market,MBS,(Mortgage Backed,Securities):,S,tructured,financial products with primary,securitization,The housing mortgages as the underlying assets,MBS,market,Fannie,Mae,and Freddie,Mac,Ginnie,Mae,P,rivate,MBS,market,Background,Causes:,External Environment,Lessons,L,EHMAN,B,ROTHERS,The,Catalyst:,the U.S.housing,bubble,Background,Causes:,External Environment,Lessons,L,EHMAN,B,ROTHERS,Boom to Bubble Federal Fund Rate,Extremely loose monetary policy since 2001,The low interest rate policy started to reverse since Jun 2004,The,Catalyst:,the U.S.housing,bubble,Background,Causes:,External Environment,Lessons,L,EHMAN,B,ROTHERS,Boom to Bubble,Housing Price,Low mortgage rate and real estate market grew fast,House prices stopped rising in the summer of 2005,Began falling sharply in 2007,The,Catalyst:,the U.S.housing,bubble,Background,Causes:,External Environment,Lessons,L,EHMAN,B,ROTHERS,Boom to Bubble,crisis began,Exhibit 5.,Annual,Existing House Price Change,Housing financial institutions expanded rapidly,Housing loan and subprime mortgage increased a lot,subprime mortgage crisis,L,EHMAN,B,ROTHERS,Exhibit 6.Supreme MBS Securitization&Distribution,Exhibit 7.CDO formation and structure,Background,Causes:,Derivative Abuse,Lessons,Hi,Hidden dangerous 1,:,Is the AAA rating mortgage,really AAA rated?,L,EHMAN,B,ROTHERS,Background,Causes:,Derivative Abuse,Lessons,Hidden dangerous 2:,Rating agencies routinely undervalued the high and rising mortgage risks,Hidden dangerous 3:,Profitable and dangerous CDS;,At the end of the boom,the face value/value=10,Exhibit 8.Relationships of CDO and CDS,L,EHMAN,B,ROTHERS,Soaring subprime default rates triggered the collapse of the MBS and CDO market.,Lehman Brothers exposed lot to CDO&CDS market,4,th,largest CDO trader(650 million USD),Top 10 CDS counterparty,The compensation for buyers loss and CDS margin swallow its cash flow,.,Sell price is only 21.9%of the book value,Background,Causes:,Derivative Abuse,Lessons,Exhibit 9.Value Depreciation of CDO,Definition of Financial Leverage,Leverage Ratio=total assets/shareholder equity,Risks,of Leverage Ratio,:leverage,ratio multiplies gains or losses.,Investment banks,Lehman,in particular,all kept highly leveraged business strategy,Background,Causes:,High Leverage,Lessons,L,EHMAN,B,ROTHERS,Source:Financial Statements of these companies,Stuck,to highly leveraged business strategy,after crisis signal emerged in subprime mortgage,market,Lehman,Brothers,relaxed its risk control criteria,and,took more,leveraged acquisitions,in real estate,December,2006 to June,2007:,11,leveraged acquisitions each with more than,5,billion dollars.,In,October,2007,acquired,Archstone-Smith with the final settlement price,up,to,22.2,billion,dollars,R,elied,on,bond market and interbank lending market,to sup
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