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Street Freak: Money, Madness, and the Collapse of Lehman Brothers

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In the annals of financial history, few events have had as profound an impact as the collapse of Lehman Brothers in 2008. The firm's failure sent shockwaves through the global economy, triggering a financial crisis that would plunge the world into a deep recession. In Street Freak: Money, Madness, and the Collapse of Lehman Brothers, financial journalist Michael Lewis provides a gripping account of the events leading up to Lehman's demise, revealing the hubris, greed, and recklessness that ultimately brought the venerable institution to its knees.

Street Freak: Money and Madness at Lehman Brothers

by Jared Dillian

4.3 out of 5

Language	:	English
File size	:	1144 KB
Text-to-Speech	:	Enabled
Screen Reader	:	Supported
Enhanced typesetting	:	Enabled
Word Wise	:	Enabled
Print length	:	370 pages

The Rise of Lehman Brothers

Lehman Brothers was founded in 1850 by three German-Jewish immigrants in Montgomery, Alabama. The firm initially focused on cotton trading but soon expanded into other areas of finance. By the early 20th century, Lehman had become one of the most powerful investment banks in the world. The firm played a major role in financing the construction of the transcontinental railroad and the development of the American industrial economy.

In the 1980s and 1990s, Lehman Brothers underwent a period of rapid growth under the leadership of CEO Dick Fuld. Fuld was an aggressive and ambitious businessman who transformed Lehman into a global financial powerhouse. The firm expanded its operations into new markets, including fixed income, derivatives, and private equity. By 2008, Lehman was one of the largest and most respected investment banks in the world.

The Road to Collapse

However, beneath Lehman's veneer of success lay a foundation of recklessness and excessive risk-taking. The firm heavily invested in the subprime mortgage market, which was in the midst of a bubble. Lehman also made large bets on complex financial instruments, such as collateralized debt obligations (CDOs). These investments were highly leveraged and exposed Lehman to significant downside risk.

As the housing bubble began to burst in 2007, Lehman's subprime mortgage portfolio began to crumble. The firm lost billions of dollars as homeowners defaulted on their mortgages. Lehman also suffered heavy losses on its CDO investments. In September 2008, Lehman Brothers announced that it was facing a liquidity crisis. The firm was unable to raise enough capital to cover its losses and was forced to file for bankruptcy.

The Aftermath of Lehman's Collapse

Lehman's bankruptcy sent shockwaves through the global financial system. The firm's failure led to a loss of confidence in the financial markets and a deep recession. Governments around the world were forced to intervene to prevent the collapse of the entire financial system.

Lehman's collapse also had a profound impact on the investment banking industry. The firm's failure led to a loss of faith in the traditional model of investment banking. In the years since Lehman's collapse, the industry has undergone a significant transformation. Investment banks are now subject to stricter regulation and have been forced to reduce their risk appetite.

Street Freak: Money, Madness, and the Collapse of Lehman Brothers is a fascinating and cautionary tale of how greed and recklessness can bring down even the most powerful institutions. Lewis's book provides a valuable insight into the events that led to the financial crisis of 2008 and the lessons that can be learned from this catastrophic event.

Street Freak: Money and Madness at Lehman Brothers

by Jared Dillian

4.3 out of 5