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“This suspense is terrible. I
hope it will last.”
Hon. Gwendolen Fairfax in ‘The Importance of Being Earnest’ by Oscar Wilde.
The failure of Lehman
Brothers in September 2008 will forever be regarded by capital markets
professionals as a JFK assassination-style moment, an occasion now set in amber
that marked the moment when everything changed – or at least should have done.
With the benefit of hindsight, it’s somewhat remarkable that the bankruptcy of
a second tier investment bank better known for credit trading than for any
facility with stock underwriting, for example, could trigger a global credit
crunch. But it did. Andrew Ross Sorkin’s ‘Too Big To Fail’ – still probably the
best example of financial crisis porn – masterfully explains why:
“It was just past 7:00 a.m. on the morning of Saturday, September 13,
2008. Jamie Dimon, CEO of JP Morgan, went into his home library and dialled
into a conference call with two dozen members of his management team.
“You are about to experience the most unbelievable week in America ever,
and we have to prepare for the absolutely worst case,” Dimon told his staff.
“..Here’s the drill,” he continued. “We need to prepare right now for
Lehman Brothers filing [for bankruptcy]. Then he paused. “And for Merrill Lynch
filing.” He paused again. “And for AIG filing.” Another pause. “And for Morgan
Stanley filing.” And after a final, even longer pause, he added: “And
potentially for Goldman Sachs filing.”
There was a collective gasp on the
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