Why Lehman Brothers Failed When It Did

Joe Pimbley’s firm was tasked to determine the facts surrounding Lehman’s failure. While numerous factors contributed to Lehman’s demise, the immediate cause was collateral calls by Lehman’s clearing banks, chiefly JPMorgan.

Lehman Brothers filed for bankruptcy on 15 September 2008. It was history’s largest bankruptcy, involving over $600 billion of liabilities. The security firm business model, the Global Financial Crisis, and Lehman’s business decisions coalesced to cause the firm’s failure. But collateral calls by Lehman’s clearing banks to cover intraday exposures, mainly calls by JPMorgan, are what drove Lehman into bankruptcy at 1:45 am on that particular Monday in September 2008.

I got the task of understanding Lehman’s failure when Lehman’s bankruptcy examiner hired my consulting firm employer. This is what I found when I helped write our 2209-page report to the bankruptcy court.

The Threads of Lehman’s Failure

In 2008, security firms operated with high leverage and significant amounts of short-term debt. Lehman had $26 billion of equity supporting $639 billion of assets and its high leverage was not unusual among security firms. But at that ratio, a 4% decline in assets wipes out equity. Meanwhile, reliance on the continuous rolling of short-term debt requires the security firm to always maintain lender confidence. Lenders’ perception of solvency becomes more important than the actual fact of solvency.

When the highly leveraged, short-term debt, security firm business model met the asset-value destruction of the Great Financial Crisis, Lehman was not the only security firm to fail. All major US firms failed to one degree or another. Besides Lehman's outright bankruptcy, Bear Stearns and Merrill Lynch were merged into commercial banks. I believe Goldman Sachs and Morgan Stanley would have defaulted on their short-term borrowings had the Fed not permitted them to convert to bank holding companies and gain access to discount window liquidity.[1]

Just as Tolstoy posited that all unhappy families are unhappy in their own way, Lehman’s failure has its own distinct trail of unfortunate business decisions. A place to begin chronicling factors specific to Lehman’s failure is the beginning of 2006. That was when the firm’s management decided to make more long-term investments.[2] Rather than remaining focused on security distribution and brokerage, Lehman increased its own holdings in commercial real estate, leveraged loans, and private equity. In our report to the bankruptcy court, we described this strategic change as a shift from the “moving business” to the “storage business.”[3]

One year later in early 2007, Lehman management viewed the incipient financial crisis as an opportunity for the firm to gain market share and revenue from competitors that were retrenching and lowering their risk profiles.[4] Lehman did not think the subprime mortgage crisis would spread to the general economy or even to its growing commercial real estate portfolio.[5] Lehman had boldly taken on assets and assumed risk in the 2001-02 economic downturn. Its risk-taking back then had paid off and it hoped such contrarian boldness would again prove profitable.[6]

Lehman’s pace of principal investments in commercial real estate, leveraged loans, and private equity increased in the first half of 2007 as other security firms reduced risk and hunkered down.[7] It committed $11 billion to acquire Archstone REIT in May 2007 and ended up funding the riskiest $6 billion of that in October when it couldn’t find enough buyers to take it out of its commitment.[8] Other bridge loans and bridge equity positions also became similarly stuck on its balance sheet.[9] Its mortgage subsidiaries were slow to stop making residential mortgage loans and Lehman ended up holding mortgage-backed bonds and mortgage-bond-backed collateralized debt obligations it couldn’t sell.[10]

To take on these risky assets, Lehman’s management raised all its internal risk limits: firm-wide, line-of-business, and even single-name risk limits.[11] Or they ignored the limits they had set.[12] Management was not fulsome in its disclosures to its board of directors about the risks it assumed and Lehman’s board did not press management for important information.[13] In theory, Lehman’s compensation policy penalized excessive risk taking, but in practice it rewarded employees on revenue with minimal attention to associated risk.[14]

Not only were these investments risky from the perspective of potential market value losses; they were risky from the point of view of financing. By their nature, real estate, leveraged loans, and private equity are hard to value and less liquid. It is difficult to determine how quickly and how severely they could lose value. These characteristics mean the ability to finance these assets cannot be assumed. If lenders worry about the realizable value of assets offered as loan security, they will lower the amount they will lend against those assets or cease lending against them altogether. Most of Lehman’s secured debt had overnight tenors, so lenders could stop rolling over their loans to Lehman on any business day!

Lehman’s management only began to cut back on leveraged loan acquisitions in August 2007[15] and they waited until later in 2007 to cut back on commercial real estate purchases.[16] Yet deals in the pipeline caused Lehman’s assets to grow $95 billion to $786 billion over the quarter ending February 2008.[17] The firm did not begin to sell assets in earnest until March 2008, but only got assets down to $639 billion by May 2008.

Lehman’s management deliberately deceived the world about the firm’s financial condition. Management used an accounting trick to temporarily remove $50 billion of assets from the firm’s balance sheet at the end of the first and second quarters of 2008.[18] In so-called “repo 105” transactions, Lehman pledged assets valued at 105% or more of the cash it received. Relying on a legal opinion from a UK law firm addressing English law, Lehman deducted the assets from its balance sheet. No other security firm used this stratagem in 2008 and Lehman did not disclose its use.[19]

Lehman’s management touted the firm’s “liquidity pool,” the sum of cash and assets readily convertible into cash and as late as two days before bankruptcy claimed this pool equaled $41 billion. In fact, only $2 billion of those assets were readily monetizable.[20]

From January to May 2008, while its competitors raised equity, Lehman did not.[21] Lehman’s management rejected offers from interested investors because they did not want to issue equity at a discount to market price.[22] Management thought doing so would make the firm seem vulnerable. Lehman did not issue common stock in 2008 until a $4 billion issuance in June.[23]

When its situation became dire, Lehman’s management approached an eclectic array of potential saviors, often two or three times: Warren Buffett and Berkshire Hathaway, The Korean Development Bank, Met Life, The Investment Corporation of Dubai, Bank of America, and Barclays. Management also offered an eclectic array of solutions: issuing convertible preferred stock, spinning off its commercial real estate assets, selling its investment management division including Neuberger Berman, finding a strategic partner willing to make a large investment, merging with a stronger entity, and selling the entire firm. None of the parties Lehman approached were able to get comfortable with any of the schemes Lehman put forward.[24] Lehman’s asset valuations were a consistent stumbling block. The United States’ government would not help Lehman, either.

Lehman’s management did not prepare adequately for bankruptcy because they thought word of such preparations would leak out; spook customers, clients, and lenders; and guarantee bankruptcy.[25] The manager of Lehman’s estate thought the lack of preparation cost the estate as much as $75 billion.[26] The bankruptcy came ten months after Lehman reported company-record annual net revenue and net income of $19 billion and $4 billion, respectively.

The Assignment

The Honorable James M. Peck of the United States bankruptcy court oversaw Lehman’s bankruptcy proceedings. As usual in large bankruptcies, the court hired an examiner, in this case the law firm Jenner & Block and specifically Anton Valukas, who led a team of ten lawyers from his firm. The court wanted the examiner to determine the facts surrounding Lehman’s failure. A crucial question was whether any entity’s actions might make it liable for recompense to Lehman’s creditors.[27]

Anton Valukas hired my firm, Duff & Phelps (now known as Kroll), to help. We got the job partially because so many other financial consultancies were already advising parties to the Lehman bankruptcy. This was a huge assignment for Duff. I was one of 10-15 managing directors on the project, and we had at least twice as many junior people rotating on and off the project. I led four teams looking at different aspects of Lehman’s failure. Intraday financing was my biggest assignment. Together, the Jenner & Block lawyers and the Duff & Phelps consultants produced a 2209-page report with 8,197 footnotes and 1,853 pages of appendices.

The project was a great assignment for me, a guy who likes to figure out financial stuff. We had access to all the players’ documents and emails, and I participated in many of the interviews of Lehman, JPMorgan, Federal Reserve Bank, and other executives.

Intraday Liquidity

JPMorgan extended intraday liquidity to Lehman owing to it being Lehman’s principal clearing bank, including providing Lehman with highly significant tri-party repo clearing.[28] Repos (repurchase agreements) are effectively secured borrowings. The borrower sells securities to the lender and promises to buy the securities back later at a higher price. The securities collateralize the loan and the difference between the securities’ original sale price and the higher repurchase price is the loan’s interest.

The classic repo example is an overnight agreement backed by US Treasury securities, although Lehman financed an array of securities using repo, sometimes over longer tenors. The classic repo counterparties are a money market fund seeking to invest cash overnight and a security firm seeking to finance its securities inventory.

To reduce the lender’s risk, the market value of the securities underlying the repo is typically greater than the repurchase amount. In market practice, this “margin” varies according to the credit risk and liquidity of the underlying securities. Investment-grade bonds require more margin than US Treasuries, leveraged loans more margin than investment-grade bonds, and equities require the greatest margin of all. Lenders also might increase margin requirements in times of asset price volatility and illiquidity, or if they doubt the borrower’s credit quality.[29]

Tri-party repo was introduced in the 1980s to reduce the risk of repo transactions. In tri-party repo, a clearing bank such as JPMorgan steps between the parties and intermediates their transaction, making sure the deliveries of security and cash occur simultaneously. To facilitate a smooth transfer, the security stays in JPMorgan’s custody and JPMorgan makes a bookkeeping entry in its records to change the security’s ownership.

In the normal course of business, clearing banks extend intraday liquidity to securities dealers. Each morning a repo matures, the repo counterparty, we’ll say Fidelity’s money market fund, receives cash in exchange for the securities it held overnight. But a securities firm like Lehman, using repo to finance its securities inventory, doesn’t have the cash to repurchase the securities. It intends to refinance the securities by the end of day via another repo. Even if Lehman instead planned to sell the securities that day, it wouldn’t have done so by the time cash was due in the morning to Fidelity.

JPMorgan steps in, advances cash to Fidelity and takes possession of the security for its own account. If Lehman enters into another repo with Fidelity by end of day, JPMorgan is paid back with Fidelity’s cash and JPMorgan transfers the security to Fidelity’s custody account at the bank. If Lehman sells the security, JPMorgan transfers the security to the buyer in exchange for its purchase price. So, whether by Lehman repo-ing or selling the security, by evening JPMorgan is paid back the money it advanced to Fidelity in the morning.

JPMorgan’s Risk and Dilemma

But what if this daily dance of repo, cash, and collateral security goes awry? What if Lehman’s repos don’t roll and the underlying securities don’t sell? Then at the end of the day, JPMorgan has not been paid back on the cash advances it made to Lehman’s repo counterparties in the morning on Lehman’s behalf. The shortfall might be made up by cash Lehman has on hand.

But if Lehman doesn’t have enough cash to pay back JPMorgan’s advances, JPMorgan must decide whether to extend overnight credit to Lehman. JPMorgan has in its possession the securities that were repo-ed yesterday and returned today by Lehman’s repo counterparties. But for some reason (Concern about Lehman? Concern about the securities?) Lehman couldn’t repo these securities today. Should JPMorgan accept these securities as repo collateral when no one else did?

If JPMorgan doesn’t extend credit to Lehman overnight, Lehman will be in default to JPMorgan. JPMorgan would seize and liquidate all the securities it held in custody for Lehman and look to Lehman for any shortfall. JPMorgan’s action would be an event of default for Lehman’s other debt. In this scenario, JPMorgan is in the unenviable position of having to decide whether to assume the risk of being Lehman’s lender of last resort or wielding the stroke that puts Lehman into bankruptcy and causes the ensuing financial turmoil.

JPMorgan’s Collateral Demands

At the beginning of 2008, the Federal Reserve Bank of New York urged clearing banks to address risks associated with their intraday exposure to broker-dealers.[30] Clearing was a concentrated industry, with JPMorgan and Bank of New York Mellon clearing for the vast majority of broker-dealers such as Lehman.[31] The Fed was rightly afraid the insolvency of JPMorgan or BNY Mellon would have a devastating effect on US financial infrastructure.

JPMorgan’s response to the Fed was to revamp the way it calculated its intraday exposure limits to broker-dealers. Previously, JPMorgan summed the value of collateral it held from broker-dealers. From this sum JPMorgan subtracted the net cash advances it made on broker-dealers’ behalf. This number was tracked throughout the day as old repos settled, as new repos were put on, and as securities were bought and sold. The result should always be positive: collateral value minus cash advances should be greater than zero.

Looking back, it seems odd the JPMorgan and BNY Mellon did not deduct margin from collateral value in their exposure calculations before the Fed’s encouragement. But in February JPMorgan told its broker-dealer customers that collateral value in its intraday exposure calculation would be reduced by two margin amounts.

The first margin deduction was the same margin overnight repo counterparties demanded.[32] But JPMorgan determined that it was at greater risk than overnight repo counterparties because the larger amount of collateral it held intraday had a greater risk of price decline in a liquidation scenario. So JPMorgan’s second margin deduction was its own liquidity risk calculation.[33] The repo counterparty margin and extra JPMorgan margin requirements were to be phased in, so the full deductions would be implemented by June.[34] In fact, Lehman’s full margin requirement was not factored into intraday exposure until 14 August.[35]

In June, JPMorgan calculated required margin at $6.1 billion and Lehman posted $5.7 billion par value of collateral.[36] Lehman posted an additional $1 billion of collateral in July and by August Lehman had posted $9.7 billion of collateral to meet JPMorgan’s requirements.[37] But by then JPMorgan began to be concerned about the quality of collateral Lehman was posting and the prices Lehman was assigning to the collateral.[38]

A pricing service that JPMorgan hired valued Lehman’s collateral far less than did Lehman. One example was collateralized debt obligations (CDOs), which in JPMorgan’s view were made up of securities Lehman underwrote and structured, but couldn’t sell. While Lehman priced the $3.5 billion face value of CDOs near par,[39] the pricing service valued them at $2 billion.[40] When JPMorgan complained about collateral mispricing at the beginning of August, Lehman said they had no other collateral available to pledge, which only raised JPMorgan’s concern.[41]

On 9 September, the Tuesday before Lehman’s bankruptcy the following Monday, JPMorgan requested an additional $5 billion of collateral, primarily for exposure JPMorgan had to Lehman on derivative trades.[42] JPMorgan was not the only entity squeezing Lehman for collateral. HSBC received $1 billion in August to continue clearing sterling security trades for Lehman.[43] Citi received $2 billion in June to continue clearing foreign exchange trades for Lehman.[44] Likewise, Bank of America, BNY Mellon, and Standard Bank in South Africa all extracted collateral from Lehman in August.[45] I focus on JPMorgan because it was Lehman’s biggest intraday creditor and because JPMorgan administered the collateral call coup de grâce to Lehman.

Also on 9 September, JPMorgan determined that it needed a “master-master” collateral agreement. This agreement would allow excess collateral under the clearing master agreement to offset a collateral shortfall under the derivatives master agreement, and vice versa. It also brought certain unsecured credit lines under the collateral agreement. [46] Citi also tightened its collateral agreements with Lehman this week.[47] JPMorgan insisted that the $5 billion of collateral be posted and the master-master be signed by the open on 10 September.[48]

If Lehman did not accede to JPMorgan’s demands, JPMorgan wielded a very heavy stick. Without a clearing bank, Lehman could not finance itself with repos. In its situation, it was not going to be able to take its clearing business elsewhere, so losing JPMorgan as its clearer meant certain bankruptcy.[49] At the same time, if JPMorgan wielded the stroke that pushed Lehman into bankruptcy it would be blamed for the financial turmoil sure to follow and it wouldn’t have gotten any additional collateral from Lehman to protect itself against losses.

But Lehman posted $2.7 billion of collateral on 9 September, $300 million more on 10 September, and $1.6 billion on 11 September for a total of $4.6 billion over those three days.[50] Meanwhile, the new collateral agreements, greatly improving JPMorgan’s position, were signed on 10 September.[51] JPMorgan kept clearing Lehman’s repos and securities trades.

Lehman announced its third quarter earnings on 10 September, a week earlier than planned, because word leaked that one of its potential rescuers had decided not to pursue a transaction. Lehman had lost $3.9 billion, bringing its loss for the first three quarters of 2008 to $6.2 billion.[52] The plans Lehman put forward on its earnings call to save the firm were unconvincing.[53]

According to JPMorgan, it was only on 11 September that a managing director from its investment banking division took a good look at some of the collateral it had received from Lehman. He realized that $8 billion of short-term debt and commercial paper Lehman had posted was credit-enhanced by Lehman, which meant that it was practically useless as protection against a Lehman default.[54]

In our examination long after the bankruptcy filing, we realized that JPMorgan had missed another problem with Lehman’s collateral. The leveraged loans in the collateralized loan obligations Lehman had posted were participated to the CLOs rather than sold or assigned to the CLOs. This meant that payments from the loan borrowers passed through Lehman instead of being paid directly to the CLOs. Those loan payments would be trapped inside Lehman if Lehman went into bankruptcy. So these CLOs were also practically useless as protection against a Lehman default.[55]

In a telephone call on 11 September, JPMorgan asked Lehman for the $1.4 billion it had not yet received per its 9 September request plus an additional $3.6 billion of collateral. It wanted the $5 billion in cash by the next morning.[56] The Lehman participant we interviewed recalled asking why JPMorgan needed the additional collateral and someone, perhaps JPMorgan Chairman and CEO Jamie Dimon, responding “no reason.” When the Lehman exec asked “What is to keep you from asking for $10 billion tomorrow?” someone, perhaps Dimon, responded “nothing” and “maybe we will.”[57] Lehman delivered the collateral on 11 and 12 September.[58]

By Friday 12 September, JPMorgan was done asking for collateral. It and Lehman’s other clearing banks had probably already extracted virtually all Lehman’s available collateral, anyway. My strong sense is that JPMorgan made clear to regulators that it was not going to clear for Lehman if Monday arrived without a permanent solution to Lehman’s problem.

There was, however, one more collateral discussion between JPMorgan and Lehman over the 13-14 September weekend. On a call Sunday afternoon, 12 hours before Lehman filed for bankruptcy, Jamie Dimon said he wished JPMorgan could help Lehman. A Lehman exec said JPMorgan could assist by returning some of Lehman’s collateral. According to the Lehman exec, Dimon left the call without responding and the call ended.[59]

Afterwards

Lehman’s demise will be controversial for as long as it is remembered. Arguments about Lehman center around whether the US government could have or should have aided Lehman at its end. Secretary of the Treasury Hank Paulson and Chairman of the Federal Reserve Ben Bernanke say government entities did not have the power to help Lehman.[60] Judge Richard Posner, of law and economics fame, and others strenuously disagree.[61] Considering the financial and economic disruption from Lehman’s bankruptcy, many commentators believe the US should have intervened, although they suggest different ways and different degrees of intervention.

My take is the opposite. Governments should not bail out banks or other financial and non-financial corporations. Let failing businesses fail – that’s the best discipline. To do otherwise is to enable poorly and corruptly run enterprises. It also ties up financial and human capital in zombie entities, weakening economic growth.

I gave a talk at the Federal Reserve Bank of New York where I said that one thread of Lehman’s demise began when the Fed leaned on JPMorgan to shore up its intraday credit risk. Perhaps I should have expected that my musing would go over with my audience like a lead balloon – as it did. By pushing JPMorgan and BNY Mellon to pay better attention to their intraday credit risk, the Fed was trying to avert the disastrous consequences of a clearing bank’s demise. The extension of credit without margin like JPMorgan was doing leads to an absurd result. If one can finance 100% of a security’s purchase price, one could buy all the securities in the world!

We concluded in our examiner’s report that there was sufficient, but not strong, evidence to support a claim that JPMorgan violated an implied covenant of good faith and fair dealing by demanding excessive collateral.[62] JPMorgan asserted after Lehman’s bankruptcy that it had unpaid claims totaling $7.60 billion versus $7.14 billion of cash and money market funds from Lehman, suggesting that JPMorgan collateral calls were reasonable.[63]

JPMorgan could also argue that it didn’t think it was over collateralized and didn’t think it was asking for so much collateral that it would sink Lehman. JPMorgan could point to the fact that when it was asking for collateral, Lehman publicly claimed to have a $41 billion liquidity pool![64] (But it’s doubtful that JPMorgan believed Lehman’s claim.) My own assessment is that under the terms of its agreement with Lehman, JPMorgan had the right to stop clearing for Lehman at any time.

My view is that JPMorgan was late in realizing how overvalued was some of the collateral Lehman posted. In fact, before Lehman’s bankruptcy, they didn’t realize that loan participations made the CLOs Lehman posted practically useless. By incrementally ratcheting up its requirements in the last week of Lehman’s existence as a going concern ($5 billion of collateral, the master-master collateral agreement, another $3.6 billion of collateral) JPMorgan probably extracted as much as it could from Lehman.

That same week, JPMorgan kept paying repo counterparties when their repos came due. More than $20 billion of non-government, non-agency repos stopped rolling that week and these lenders got out of their Lehman exposure.[65] Presumably, a significant amount of that lost funding was taken up by JPMorgan and secured by the collateral it extracted from Lehman (as well as the collateral securing the repos before JPMorgan assumed them).

Two months after the release of the examiner’s report, Lehman estate creditors sued JPMorgan for $8.6 billion alleging improper collateral demands.[66] After back-and-forth court decisions,[67] JPMorgan eventually paid Lehman’s creditors $1.42 billion in 2016[68] and $798 million in 2017.[69]

Joe Pimbley began his dismayingly long career as physicist, semiconductor device engineer, and applied mathematician. Thirty years ago, he diverted to Wall Street and subsequently filled numerous roles as a quantitative analyst, developer, business leader, trader, and risk manager for derivatives, structured finance, rating agencies, bond insurers, and asset managers. Joe is now a consultant and litigation expert as principal of Maxwell Consulting. He is a two-time contributor to Stories.Finance.

[1] The first two paragraphs of Goldman Sachs’ announcement of its conversion to a bank holding company supports my claim. The first three paragraphs of Morgan Stanley’s announcement are similar. Quoting from the Federal Reserve’s public comment regarding Morgan Stanley: “In light of the unusual and exigent circumstances affecting the financial markets, and all other facts and circumstances, the Board has determined that emergency conditions exist that justify expeditious action on this proposal.” All three announcements are dated 21 September 2008, six days after Lehman’s bankruptcy.

[2] To my knowledge, all facts asserted in this story are in the public domain, chiefly in the Lehman Brothers Holdings Inc. Chapter 11 Proceedings Examiner Report. Volume and page citations in footnotes refer to that report. Here they are Volume 1 Pages 59-60.

[3] Volume 1 Page 43.

[4] Volume 1 Pages 43 and 79.

[5] Volume 1 Pages 44-45 and 80.

[6] Volume 1 Page 79 Footnote 248.

[7] Volume 1 Pages 81, 95-97, and 103-105.

[8] Volume 1 Pages 108-12 and 128-30.

[9] Volume 1 Page 124.

[10] Volume 1 Pages 84-89 and 93.

[11] Volume 1 Pages 50-51 summary, 73 firmwide, 74-75 single name, 97-98 and 176-77 leveraged loans, 106 commercial real estate.

[12] Volume 1 Pages 50-51 summary, 66-70, 131 Archstone REIT.

[13] Volume 1 Pages 52-53, 77-78, 116-17, and 140-49.

[14] Volume 1 Pages 161-62.

[15] Volume 1 Page 122.

[16] Volume 1 Page 158.

[17] Volume 1 Page 158.

[18] Volume 1 Pages 18-19.

[19] Michael J. de la Merced and Julia Werdigier, The Origins of Lehman’s ‘Repo 105, New York Times, 12 March 2010.

[20] Volume 1 Page 10, Volume 4 Pages 1082-83, and Lehman Brothers PowerPoint presentation “Liquidity of Lehman Brothers,” page 9, 7 October 2008, search LBHI_SEC07940_844701.

[21] Volume 2 Pages 627-29.

[22] Volume 1 Page 152.

[23] Volume 2 Page 640.

[24] Volume 2 Pages 640-710.

[25] Volume 2 Pages 622 and 718.

[26] Volume 2 Page 725.

[27] Volume 1 Page 15.

[28] Volume 4 Page 1068.

[29] Volume 4 Page 1084-94 for general repo discussion and JPMorgan-Lehman relationship specifically.

[30] Volume 4 Page 1094.

[31] Volume 4 Page 1085.

[32] Volume 4 Page 1096.

[33] Volume 4 Pages 1099-1100.

[34] Volume 4 Page 1098.

[35] Volume 4 Page 1104.

[36] Volume 4 Pages 1101-02.

[37] Volume 4 Page 1105.

[38] Volume 4 Page 1106.

[39] Volume 4 Page 1107.

[40] Volume 4 Page 1109.

[41] Volume 4 Page 1106.

[42] Volume 4 Page 1138.

[43] Volume 4 Page 1078.

[44] Volume 4 Page 1074.

[45] Volume 4 Page 1081.

[46] Volume 4 Page 1133.

[47] Volume 4 Page 1075.

[48] Volume 4 Page 1134.

[49] Volume 4 Page 1135.

[50] Volume 4 Pages 1142-43.

[51] Volume 4 Page 1150.

[52] Volume 1 Page 10.

[53] Lehman Brothers PowerPoint presentation “Liquidity of Lehman Brothers,” page 10, 7 October 2008, search LBHI_SEC07940_844701.

[54] Volume 4 Pages 1165-66.

[55] J. M. Pimbley, “The ECB Should Not Take Counterfeit Collateral,” Creditflux, February 2012.

[56] Volume 4 Pages 1161-62.

[57] Volume 4 Page 1162.

[58] Volume 4 Page 1165.

[59] Volume 4 Page 1171.

[60] Volume 1 Page 12 Footnote 45.

[61] For example, Laurence M. Ball, The Fed and Lehman Brothers: Setting the Record Straight on a Financial Disaster, Cambridge University Press, 2018.

[62] Volume 4 Page 1210 and 1214.

[63] Volume 4 Page 1219.

[64] Lehman Brothers PowerPoint presentation “Liquidity of Lehman Brothers,” page 9, 7 October 2008, search LBHI_SEC07940_844701.

[65] Lehman Brothers PowerPoint presentation “Liquidity of Lehman Brothers,” page 12, 7 October 2008, search LBHI_SEC07940_844701.

[66] Jonathan Stempel, Lehman Sues JPMorgan for Billions in Damages, Reuters, 26 May 2010.

[67] Patrick Fitzgerald, Judge Rules for J.P. Morgan in $8.6 Billion Lehman Lawsuit, Wall Street Journal, 1 October 2015.

[68] Jonathan Stempel, JPMorgan to Pay $1.42 Billion Cash to Settle Most Lehman Claims, Reuters, 25 January 2016.

[69] Patrick Fitzgerald, Judge Approves $800 Million J.P. Morgan Settlement With Lehman, Wall Street Journal, 17 February 2017.

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Copyright © 2023 Joe Pimbley. All rights reserved. Used here by permission. Short excerpts may be republished if Stories.Finance is credited or linked.