Five Years After Lehman Brothers Collapsed, What’s Changed?

Five years after the collapse of Lehman Brothers, we look at the bust that followed, what’s been cleaned up on Wall Street, and what has not.

Robin Radaetz holds a sign in front of the Lehman Brothers headquarters Monday, Sept. 15, 2008 in New York. Lehman Brothers, a 158-year-old investment bank choked by the credit crisis and falling real estate values, filed for Chapter 11 protection five years ago. (AP)

Robin Radaetz holds a sign in front of the Lehman Brothers headquarters Monday, Sept. 15, 2008 in New York. Lehman Brothers, a 158-year-old investment bank choked by the credit crisis and falling real estate values, filed for Chapter 11 protection five years ago. (AP)

Five years ago this week, Wall Street and the world shook when mighty Lehman Brothers bit the dust.  Collapsed in bankruptcy.  It had been a towering American finance pillar – right up there with Goldman Sachs and Morgan Stanley and the rest, and in the same kind of business – and then, overnight, it was nothing but wreckage.  The world economy came within a hair of nightmare Depression.  And the Great Recession we did have brought loss and suffering all over.  Has Wall Street reformed?  Barely.  Could it happen again.  Incredibly, yes.  Up next On Point:  five years after Lehman.

– Tom Ashbrook


Bethany McLean, contributing editor at Vanity Fair, columnist for Reuters and contributor at CNBC, co-author with New York Times columnist Joe Nocera of “All The Devils are Here: The Hidden History of the Financial Crisis.”

Alan Blinder, professor of economics and public affairs at Princeton University, former member of the Council of Economic Advisers and former vice chairman of the Board of Governors of the Federal Reserve System; author of “After the Music Stopped: The Financial Crisis, the Response, and the Work Ahead.”

From Tom’s Reading List

The Wall Street Journal: Five Years Later, Financial Lessons Not Learned — “Years of disgraceful financial shenanigans in the 2000s, some illegal but many just immoral, brought on the Great Recession with virtually no help from any co-conspirators. Congress and President Obama reacted comparatively weakly with the Dodd-Frank Act of 2010, which certainly did not seek to remake the U.S. financial system. I am a big supporter of Dodd-Frank, despite its timidity, because laws must be graded on a curve. Sadly, even this good-though-weak law now seems to be withering on the regulatory vine. Far from being tamed, the financial beast has gotten its mojo back—and is winning. The people have forgotten—and are losing.”

Slate: What We Haven’t Learned From the Crisis — “This weekend marks the fifth anniversary of Lehman Brothers’ final, chaotic descent into bankruptcy. The investment bank wasn’t the first American financial institution to drown in bad bets on mortgage-backed securities. But unlike those that had come before, Lehman wasn’t covered by the FDIC and its resolution process. And despite the scrambling efforts of the Treasury Department and Federal Reserve, there was no way to quasi-save it through the kind of shotgun marriage that was deployed to sell Bear Stearns to JPMorgan Chase. Lehman was going down, and all officials could do was wait to see what happened next.”

Reuters: The Crackdown on Bank Misbehavior Masks a Troubling Reality — “By one measurement, the problem has gotten worse by an order of magnitude in recent years. In the annual letter he writes to shareholders, Robert Wilmers, the chairman and CEO of M&T Bank, has started keeping track of the fines, sanctions and legal awards levied against the “Big Six” bank holding companies. In 2011, those penalties were $13.9 billion. In 2012, they more than doubled to $29.3 billion. Wilmers writes that the past two years represent the majority of the cumulative $52 billion in charges, from 236 separate actions in eight countries, over the past 11 years. Wilmers also cites a study done by M&T, according to which the top six banks have been cited 1,150 times by the Wall Street Journal and the New York Times in articles about their improper activities. “

Please follow our community rules when engaging in comment discussion on this site.
Oct 7, 2015
The Doctors Without Borders trauma center is seen in flames, after explosions near their hospital in the northern Afghan city of Kunduz. Doctors Without Borders announced that the death toll from the bombing of the group's Kunduz hospital compound has risen to at least 16, including 3 children and that tens are missing after the explosions that may have been caused by a U.S. airstrike.  (AP)

The U.S. airstrike on the hospital in Kunduz. The top U.S. commander in Afghanistan faces tough questions from Congress. We’re looking for what really happened.

Oct 7, 2015
Students in the new documentary film "Beyond Measure" take part in a project-based learning activity with their peers. (Courtesy the Filmmakers)

Arne Duncan’s headed out as U.S. Education Secretary. What’s next for America’s school kids?

Oct 6, 2015
In this Wednesday, Sept. 2, 2015, photo, Dorothy McIntosh Shuemake, mother of Alison Shuemake, browses a picture collage of her daughter at her home, in Middletown, Ohio. Alison Shuemake, 18, died Aug. 26, after a suspected heroin overdose. (AP)

American addiction. From prescription painkillers to heroin. The numbers are staggering. Why?

Oct 6, 2015
Eric Baker, co-owner of the Mo Money Pawn Shop, poses for a photo at the shop Wednesday, Sept. 23, 2015, in Phoenix.  (AP)

American gun policy front and center in the 2016 campaigns after the shootings in Oregon. We’ll look at who stands where on guns.

On Point Blog
On Point Blog
Rep. Daniel Webster: ‘I’m Gonna Sell This Message’
Tuesday, Oct 6, 2015

When House Speaker John Boehner (R-OH) announced his retirement and resignation from his position last month, it surprised both his Party and the Washington political establishment. Now, with the House set to vote on a new Speaker on Oct. 25, three would-be party leaders are stepping in to make their case. U.S. Rep. Daniel Webster […]

More »
Our Week In The Web: October 2, 2015
Friday, Oct 2, 2015

We say hello again to our email address (since so many of you did this week) and goodbye to the Log Lady.

More »
Interview With Sen. Bernie Sanders: ‘Count Me As A Radical’
Thursday, Oct 1, 2015

Vermont Sen. Bernie Sanders is making waves in the 2016 Presidential race, and he joined us today from the US Capitol to explain how his campaign message is connecting with voters around the country.

More »