THE LEHMAN

BROTHERS

Lucy Rogers, Aurora, Irene & Natalie Taylor

CRASH

Sunday, 26 January 14

What are stocks & what affect do they have?

The Stock market shows the gross national product of a country. A collapse in share prices has the potential to cause widespread economic disruption.

Effect on Pensions

Falling share prices can hamper firms ability to raise finance on the stock market.

Short-termism.

Sunday, 26 January 14

‘The worst crisis sinceWorld War I.’

how the then Governor of the Bank of England, Lord King, described the Lehmen

Brothers crash.

Sunday, 26 January 14

Background HistoryFinancial services firm Lehman Brothers filed for Chapter 11 bankruptcy protection on September 15, 2008. The filing remains the largest bankruptcy filing in U.S. history, with Lehman holding over $600 billion in assets

Lehman borrowed significant amounts to fund its investing in the years leading to its bankruptcy in 2008, a process known as leveraging or gearing.

While generating tremendous profits during the boom, this vulnerable position meant that just a 3–4% decline in the value of its assets would entirely eliminate its book value of equity. Investment banks such as Lehman were not subject to the same regulations applied to depository banks to restrict their risk-taking.

Sunday, 26 January 14

Facts about the Crash

The crash was known as the largest bankruptcy in the world & affected the entire economy all over the world.

2600 employees lost their jobs, investors lost all or nearly all of their money.

This caused a chain reaction & an economic downturn. Lehman brought a huge amount of real estate the they couldn’t unload when the market went south. The company was borrowing $44 for every $1 they had in the bank.

Sunday, 26 January 14

• Lehman Brother executives manipulated down sheets & financial reports when investors started losing confidence & competitors closed in.

• These reports are unfair and untruthful report of the companies financial position, which effectively is fraud. There if sufficient evidence against the top executives including the CEO, Richard Fuld in certifying the statements.

Why was the crash so sudden?

• Lehman Brother’s accountants Ernest + Young failed to challenge the numbers.

• Repo 105 occurred.

• Repo 105 occurred in 2007, just 10 months before the crash.

Sunday, 26 January 14

http://www.youtube.com/watch?v=NIBDVH8fRqc

Lehman Brothers collapse. Sep. 15, 2008. Stock Market Reactions

Lehman Brothers, burdened by $60 billion in soured real-estate holdings, filed a Chapter 11

bankruptcy petition in the US Bankruptcy Court after attempts to rescue the 158-year-old firm

failed on September 15, 2008.Sunday, 26 January 14

• The FTSE 100 (known as the footsie) is a share index of the 100 companies listed on the London Stock Exchange with the highest market capitalization.

• It is one of the most widely used stock indices and is seen as a gauge of business prosperity for business regulated by UK company law.

• But it was the aftermath of the Lehman bankruptcy that caused the most damage.

• Fashion companies within the FTSE 100 were Next Plc, Burberry & Marks & Spencer.

WHAT IS FTSE 100?

How did it Impact the Fashion Industry?

Sunday, 26 January 14

There were sharp drops in the shares of Macy’s Inc., down 6.5 % Saks Inc., 6.4 %Sears Holdings Corp. 3.2 % Kohl’s Corp. 2.2 %. American Eagle Outfitters Inc., down 3.7 %AnnTaylor Stores Corp., 3.4 %Limited Brands Inc., 3.2 %Abercrombie and Fitch Co., 2.4 %,Gap Inc., 1.3 %. Liz Claiborne, down 3.8 % Polo Ralph Lauren Corp., 3.5 % Coach Inc., 3.3 % VF Corp., 1.6 %

Fashion Stocks Drops in the US

Asos fell 3.6 %Burberry Group plc, 2.5 %

Marks and Spencer Group plc, 1.9 %.

Luxury players across Europe

Bulgari down 3.8 % LVMH Moët Hennessy Louis Vuitton off 2.8

% and PPR down 2.1 %.

Fashion Stocks in the UK

Sunday, 26 January 14