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08 July 2010 / Anthony Connerty
Issue: 7425 / Categories: Features , Commercial
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Lehman lessons

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Anthony Connerty reports on how ADR has helped deal with the fallout from the collapse of Lehman Brothers

Lehman Brothers, a Wall Street institution that could trace its origins back over 150 years, declared itself insolvent by filing for Ch 11 protection against its creditors in the early hours of Monday, 15 September, 2008.

It was to be the biggest bankruptcy in US history. President Bush would later sign an emergency order providing government insurance to the $3.5trn that was tied up in money market funds. The Lehman collapse affected not only the US: it triggered a global financial crisis.

What led to the collapse of institutions like Lehman Brothers?

Breach of a classic rule of banking

The traditional UK building society takes in deposits from investors and uses those deposits to lend out money to house purchasers, taking a mortgage on the property to secure the money loaned. Care is taken in valuing the property to be purchased and in checking out the borrower: are the borrower’s circumstances—job/wages/commitments, and so on—such as to indicate

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