This month marked the 10th anniversary of Lehman Brothers collapse. Many say that such a collapse will never happen again because regulators will simply not allow it. I predicted the fall of Lehman Brothers earlier in 2008 when I was a guest with Wolf Blitzer on CNN’s Larry King Live.
Let me refresh your memory the events leading to the largest bankruptcy filing in U.S. history:
“In 2008, Lehman faced an unprecedented loss due to the continuing subprime mortgage crisis. The loss was largely due to Lehman holding onto large positions in subprime and other lower-rated mortgage tranches when securitizing the underlying mortgages. Huge losses accrued in lower-rated mortgage-backed securities throughout 2008. In the second fiscal quarter, Lehman reported losses of $2.8 billion and decided to raise $6 billion in additional capital by offering new shares. In the first half of 2008 alone, Lehman stock lost 73% of its value as the credit market continued to tighten. In August 2008, Lehman reported that it intended to release 6% of its workforce, 1,500 people, just ahead of its third-quarter-reporting deadline in September.”