ABSTRACT
Lehman Brothers was the self-proclaimed innovator in global finance and one of the oldest and the fourth largest of the Wall Street investment banks. Under the command of its tough chief executive officer (CEO), Dick Fuld, Lehman Brothers had distinguished itself as the aggressive outlier in the international investment banking community and had an apparently insatiable appetite for risk and return. During January 2008 Lehman's stock traded as high as $65 per share, with a market capitalization of over $30 billion. Lehman had entered the subprime residential mortgage market with considerable enthusiasm and recognized more slowly than the other investment banks the developing storm early in 2007 as the crisis developed with a rapidly increasing default rate in subprime mortgages. By the close of trading on 12 September 2008, Lehman's share price had declined to $3.65 per share, a 94 per cent drop from the $62 price at the beginning of the year.
