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The Lehman Brothers opened for business in 1850, even before the civil war (1861–65). Now, after 158 years, the illustrious financial powerhouse is gone and the founders must be turning in their graves.You could be sure that the careful and methodical practices of the founders were lost by its current management team that strayed from sound business practices when they indulged in risky lending adventures and extremely high leverage.
From the company's web site:
The history of Lehman Brothers parallels the growth of the United States and its energetic drive toward prosperity and international prominence. What would evolve into a global financial entity began as a general store in the American South. Henry Lehman, an immigrant from Germany, opened his small shop in the city of Montgomery, Alabama in 1844. Six years later, he was joined by brothers Emanuel and Mayer, and they named the business Lehman Brothers.
Cotton was the cash crop of the time, and the Lehmans accepted it from the local farmers as currency to settle accounts. The brothers traded the cotton for cash or merchandise, becoming brokers for buyers and sellers of the crop. In 1858, they opened an office in New York, which was the commodity trading center of the country.
Lehman Br Holdings (OTC: LEHMQ), now delisted from the NYSE -- closed $16.88 on July 29 when I started tracking it for Chasing Value: Financial devastation? Still up but less. That was already down 75% from its 52-week high of $67.73.
In considering what needs to be done to remedy the precarious way our financial institutions have been managed, in addition to tighter lending and reserve requirements, perhaps there needs to be more at risk for management. Right now they make tens and even hundreds of millions of dollars, win, lose or draw -- and that's outrageous.
In considering what needs to be done to remedy the precarious way our financial institutions have been managed, in addition to tighter lending and reserve requirements, perhaps there needs to be more at risk for management. Right now they make tens and even hundreds of millions of dollars, win, lose or draw -- and that's outrageous.
Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture & planning firm. He writes the columns Chasing Value and Serious Money. Disclosure: I never had any position in LEH.
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Reader Comments (Page 1 of 1)
9-23-2008 @ 12:37PM
Shelley said...
Not only is it sad to see what happened, its pathetic to see how much money people lost by holding onto their stock. No longer does that have to be. Its why we created SmartStops - to protect the retail investor.
http://www.smartstops.net
9-23-2008 @ 1:33PM
joe said...
Dear Mr. President, Senators and Congressmen:
No matter what you are being told, the people telling you that need to do this Wall Street bailout are doing so for their own self interest and not the true interest of the United States and its citizens. If you sign this bill as it currently is being purposed you will be blamed for creating a 10 to 20 year recession like what took place in Japan.
I cannot help but think that there will be a massive change in the general population’s attitude about people staying in office longer than one term because of the pain that will be inflicted on the average citizen and the improper benefit given to the few.
Just think for yourself what would happen if this same money was used to develop all forms of energy in the United States, Wind, solar, Geothermal, Water, Oil, Coal etc,.
Those who loose their jobs due to the bad judgment of Wall Street would be retrained to work in these new developing industries. Then, even though America will have a period of slow down, we will emerge stronger with a growing economy with jobs that cannot be transferred overseas.
Industries will be paying taxes and people will be paying for their mortgage. This will have the added benefit of stopping the massive transfer of wealth from America to foreign countries.