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73-514: OFHEO was managed by a director, appointed by the president and ratified by the Senate. The final director was James B. Lockhart III , assuming the position during a time of crisis as acting director April 28, 2006, when nominated, confirmed to the post on June 15, and sworn in June 26, 2006. The previous Director was Armando Falcon, Jr , confirmed September 29, 1999, and forced to resign February 4, 2003, over

146-459: A $ 25-million after-tax charge and a $ 27-million reduction in goodwill . The firm said that poor market conditions in the mortgage space "necessitated a substantial reduction in its resources and capacity in the subprime space". In 2008, Lehman faced an unprecedented loss due to the continuing subprime mortgage crisis . Lehman's loss resulted from having held onto large positions in subprime and other lower-rated mortgage tranches when securitizing

219-517: A buyout by MidAmerican Energy , part of Berkshire Hathaway (headed by billionaire Warren Buffett ). The Federal Agricultural Mortgage Corporation or Farmer Mac said it would have to write off $ 52.4 million in Lehman debt in the form of senior debt securities it owned as a result of the bankruptcy. Farmer Mac said it might not be in compliance with its minimum capital requirements at the end of September. In Hong Kong, more than 43,700 individuals in

292-459: A combined 249 billion yen ($ 2.4 billion) in potential losses tied to the Lehman shock. Mizuho Trust & Banking cut its profit forecast by more than half, citing 11.8 billion yen in losses on bonds and loans linked to Lehman. The Bank of Japan Governor Masaaki Shirakawa said, "Most lending to Lehman Brothers was made by major Japanese banks, and their possible losses seem to be within the levels that can be covered by their profits," adding, "There

365-511: A force in the subprime market . By 2003 Lehman made $ 18.2 billion in loans and ranked third in lending. By 2004, this number topped $ 40 billion. By 2006, Aurora and BNC were lending almost $ 50 billion per month. Lehman had morphed into a real estate hedge fund disguised as an investment bank . By 2008, Lehman had assets of $ 680 billion supported by only $ 22.5 billion of firm capital. From an equity position, its risky commercial real estate holdings were thirty times greater than capital. In such

438-596: A hearing on September 23, 2008 with Secretary Paulson, Chairman Bernanke and SEC Chairman Cox on the need for the Troubled Asset Relief Program (TARP). He served as a member with them and HUD Secretary Preston and subsequently their successors as members of the Financial Stability Oversight Board overseeing the $ 700 billion TARP fund. After the election of President Barack Obama , Lockhart remained in his post as Director of FHFA. He played

511-597: A hedge fund and a Mortgage Recovery Fund. It is a subsidiary of Invesco , a Fortune 500 investment management firm. He coordinates WL Ross's investments in financial services firms and mortgages. Lockhart serves co-chairs the Bipartisan Policy Center 's Commission on Retirement Security and Personal Savings. For the prior 7 1 ⁄ 2 years, he served in the US Government in a series of Presidential-appointed, Senate-confirmed positions. From July 30, 2008, he

584-420: A highly leveraged structure, a three- to five-percent decline in real estate values would wipe out all capital. Lehman borrowed significant amounts to fund its investing in the years leading to its bankruptcy in 2008, a process known as leveraging or gearing. A significant portion of this investment was in housing-related assets, making it vulnerable to a downturn in that market. One measure of this risk-taking

657-1022: A key role in the Obama Administration's effort to stem home foreclosures, including the Making Home Affordable Program. Throughout the market turmoil, he continued to oversee the smooth transition to a new agency. OFHEO and FHFA both received the Association of Government Accountants award – Certificate for Excellence in Accountability Reporting as had Social Security. He worked closely with the 12 Federal Home Loan Bank Presidents as they dealt with their private label MBS problems. He strengthened their Office of Finance's board that produces their combined financial statements. In 1997, Lockhart co-founded and served as managing director of NetRisk Inc. Lockhart has served as Senior Vice President, Finance, at National Reinsurance(1996) which

730-421: A loss relating to the transactions" and warned that "actual losses could materially exceed current estimates." Freddie was still in the process of evaluating its exposure to Lehman and its affiliates under other business relationships. After Constellation Energy was reported to have exposure to Lehman, its stock went down 56% in the first day of trading having started at $ 67.87. The massive drop in stocks led to

803-625: A money-management firm targeted at wealthy individuals. Its $ 2.5 billion of assets would join Neuberger's $ 50 billion in high-net-worth client assets under management. An article in The Wall Street Journal on September 15, 2008, announcing that Lehman Brothers Holdings filed for Chapter 11 bankruptcy protection , quoted Lehman officials regarding Neuberger Berman: Neuberger Berman LLC and Lehman Brothers Asset Management will continue to conduct business as usual and will not be subject to

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876-564: A potential liability of $ 2.5 billion to be paid as severance , if it chooses not to retain some Lehman employees beyond the guaranteed 90 days. On September 22, 2008, Nomura Holdings, Inc. announced it agreed to acquire Lehman Brothers' franchise in the Asia Pacific region including Japan, Hong Kong and Australia. The following day, Nomura announced its intentions to acquire Lehman Brothers' investment banking and equities businesses in Europe and

949-485: A similar emergency." Luc Despins, the creditors committee counsel, said: "The reason we're not objecting is really based on the lack of a viable alternative. We did not support the transaction because there had not been enough time to properly review it." In the amended agreement, Barclays would absorb $ 47.4 billion in securities and assume $ 45.5 billion in trading liabilities. Lehman's attorney Harvey R. Miller of Weil, Gotshal & Manges , said "the purchase price for

1022-578: A story in The New York Times revealed that Lehman had used a small company, Hudson Castle , to move a number of transactions and assets off Lehman's books as a means of manipulating accounting numbers of Lehman's finances and risks. One Lehman executive described Hudson Castle as an "alter ego" of Lehman. According to the story, Lehman owned one quarter of Hudson; Hudson's board was controlled by Lehman, most Hudson staff members were former Lehman employees. On February 22, 2011, Judge James M. Peck of

1095-509: A unit of Canada's Great-West Lifeco , shut a $ 12.3 billion money-market fund as it faced "significant redemption pressure" on September 17, 2008. Evergreen Investments said its parent Wachovia Corporation would "support" three Evergreen money-market funds to prevent their shares from falling. This move to cover $ 494 million of Lehman assets in the funds also raised fears about Wachovia's ability to raise capital. Close to 100 hedge funds used Lehman as their prime broker and relied largely on

1168-498: A way to encourage better funding of pension plans, he began publishing the “Top 50” underfunded pension plan list. He also pushed for legislative reforms which led to the passage of legislation in 1993. Within three weeks of his appointment in May 2006, Lockhart published a report detailing the numerous missteps by Fannie Mae's previous management and signed a consent agreement that restated Fannie Mae's extra 30% capital requirement and capped

1241-584: A year and in March got their Boards to agree to raise significant equity. The new Federal Housing Finance Agency (FHFA) combined OFHEO; the Federal Housing Board, which regulated the 12 Federal Home Loan Banks; and the HUD group that oversaw Fannie Mae's and Freddie Mac's mission and affordable housing goals. Lockhart became the first director of the new agency and Chairman of its Oversight Board, whose other members were

1314-461: Is no concern that the latest events will threaten the stability of Japan's financial system." During bankruptcy proceedings a lawyer from The Royal Bank of Scotland Group said the company was facing between $ 1.5 billion and $ 1.8 billion in claims against Lehman partially based on an unsecured guarantee from Lehman and connected to trading losses with Lehman subsidiaries, Martin Bienenstock. Lehman

1387-502: Is vital that Congress pass legislation creating an empowered regulator now.” He testified in favor of stronger legislation several times and gave numerous speeches which were well chronicled. These efforts were strongly supported by President Bush and Treasury Secretary Paulson. Reform legislation was passed by the House in May 2007 just as what was then considered only a “subprime crisis” was starting to appear. The Senate, however, did not pass

1460-428: The 2007–2008 financial crisis . The New York Times reported that during his watch, "both Freddie and Fannie had plunged into the riskiest part of the market, gobbling up more than $ 400 billion in subprime and other alternative mortgages," criticizing Lockhart for lax oversight and not responding to early signs of trouble at those institutions. The FHFA office strenuously defended Lockhart's record in response, citing

1533-680: The Bankruptcy Court for the Southern District of New York . Caretaker offices in the US and abroad have continued to oversee payments to the company's creditors. Lehman Brothers was one of the first Wall Street firms to move into the business of mortgage origination . In 1997, Lehman bought Colorado-based lender Aurora Loan Services , an Alt-A lender. In 2000, to expand their mortgage origination pipeline, Lehman purchased West Coast subprime mortgage lender BNC Mortgage LLC . Lehman quickly became

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1606-572: The Federal Reserve summoned several banks to negotiate financing for its reorganization. These discussions failed, and Lehman filed a Chapter 11 petition that remains the largest bankruptcy filing in U.S. history , involving more than US$ 600 billion in assets. The bankruptcy triggered a 4.5% one-day drop in the Dow Jones Industrial Average , then the largest decline since the attacks of September 11, 2001 . It shook confidence in

1679-500: The Federal Reserve Bank of New York , called a meeting on the future of Lehman, which included the possibility of an emergency liquidation of its assets. Bankers representing all the major Wall Street firms were in attendance. The meeting goal was to find a private solution in rescuing Lehman and extinguish the flame of the global financial crisis. Lehman reported that it had been in talks with Bank of America and Barclays for

1752-985: The Financial Stability Oversight Board from its inception in 2008. This board was set up to oversee the Troubled Asset Relief Program . which is chaired by the Chairman of the Federal Reserve Board and has as its other members the Secretaries of the Treasury and HUD, and the Chair of the SEC. From 2002 to 2006, Lockhart served as The Deputy Commissioner and Chief Operating Officer of the Social Security Administration and as Secretary to

1825-475: The Hong Kong Association of Banks , agreed to buy back the bonds, which were priced using an agreed upon methodology based on its estimated current value. Neuberger Berman Inc., through its subsidiaries, primarily Neuberger Berman, LLC, is an investment-advisory firm founded in 1939 by Roy R. Neuberger and Robert Berman, to manage money for high-net-worth individuals . In the decades that followed,

1898-464: The New York Stock Exchange halting trade of Constellation. The next day, as the stock plummeted as low as $ 13 per share, Constellation announced it was hiring Morgan Stanley and UBS to advise it on "strategic alternatives", suggesting a buyout. While rumors suggested French power company Électricité de France would buy the company or increase its stake, Constellation ultimately agreed to

1971-576: The Pension Benefit Guaranty Corporation (PBGC) from 1989-93. While he was at the PBGC, the agency restored the LTV Steel pension plans through a Supreme Court ruling and faced major airline (Eastern, PanAm, Continental and TWA) and steel company bankruptcies. PBGC also produced its first audited accounts in its history and was removed from GAO's High Risk list under Lockhart's leadership. As

2044-424: The largest bankruptcy filing in U.S. history , with Lehman holding over $ 600 billion in assets. On September 22, 2008, a revised proposal to sell the brokerage part of Lehman Brothers holdings of the deal was put before the bankruptcy court, with a $ 1.3666 billion (£700 million) plan for Barclays to acquire the core business of Lehman Brothers (mainly Lehman's $ 960 million Midtown Manhattan office skyscraper),

2117-519: The CEO's and Boards were replaced for both Fannie Mae and Freddie Mac, and the two GSEs continued operations without interruption. With strong financial support provided by Treasury as authorized by HERA, the mortgage markets calmed temporarily only to be disrupted the following week by the bankruptcy of Lehman Brothers . Secretary Paulson's book, On The Brink , deals extensively with the conservatorships of Fannie Mae and Freddie Mac. Lockhart's tenure spanned

2190-950: The CFO of Riegel Paper Corporation. Lockhart joined the Navy in 1969 after spending a year at the First National Bank of St. Paul. At Officer Candidate School, he was the Supply Corps Honor Graduate and at the Navy Supply Corps School he graduated with High Honors. He served as the Supply Officer on the Nuclear Ballistic Submarine USS George Washington Carver (SSBN-656) homeported in Holy Loch, Scotland. Lockhart III, James B. "Meet

2263-578: The Director" . Archived from the original on 2008-12-20 . Retrieved 2009-01-14 . Bankruptcy of Lehman Brothers The bankruptcy of Lehman Brothers , also known as the Crash of '08 and the Lehman Shock on September 15, 2008, was the climax of the subprime mortgage crisis . After the financial services firm was notified of a pending credit downgrade due to its heavy position in subprime mortgages,

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2336-555: The Lehman Brothers' top people forgo multimillion-dollar bonuses to "send a strong message to both employees and investors that management is not shirking accountability for recent performance". Lehman Brothers Investment Management Director George Herbert Walker IV dismissed the proposal, going so far as to actually apologize to other members of the Lehman Brothers executive committee for the idea of bonus reduction having been suggested. He wrote, "Sorry team. I am not sure what's in

2409-517: The London business and the U.S. holding company filed for bankruptcy, positions held by those hedge funds at Lehman were frozen. As a result, the hedge funds were forced to de-lever and sit on large cash balances, inhibiting chances at further growth. This in turn created further market dislocation and overall systemic risk, resulting in a $ 737 billion decline in collateral outstanding in the securities lending market. In Japan, banks and insurers announced

2482-457: The Middle East. A few weeks later it was announced that conditions to the deal had been met, and the deal became legally effective on Monday, October 13. In 2007, non-US subsidiaries of Lehman Brothers were responsible for over 50% of global revenue produced. The Dow Jones closed down just over 500 points (−4.4%) on September 15, 2008, at the time the largest drop by points in a single day since

2555-545: The Primary Reserve Fund was the first time since 1994 that a money-market fund had dropped below the $ 1-per-share level. On Monday, September 15, 2008, the market staged a run on AIG with shares plummeting 61 percent. Shareholders also fled from Goldman Sachs and Morgan Stanley. Two weeks later, the Fed agreed to give the bank holding company status which provided vital access to the Fed discount window. Putnam Investments ,

2628-521: The Secretaries of Treasury and HUD and the Chairman of the SEC. By August 2008, Fannie Mae and Freddie Mac were unable to raise additional equity while still purchasing over 70% of the mortgages originated in the US. Working closely with Secretary Paulson and Federal Reserve Chairman Bernanke, Lockhart convinced the Boards of Directors of both GSEs to consent to being placed into conservatorship in meetings on Saturday, September 7, 2008. As part of this process,

2701-822: The Social Security Board of Trustees. He was a member of President Bush's Management Council and its Executive Committee. At SSA, he was the leader in promoting Social Security reform and in getting the Supplemental Security Income Program, the nation's largest cash-based welfare program, removed from GAO's High Risk list. SSA, OFHEO and FHFA all received the Association of Government Accountants' prestigious Certificate in Excellence for Accountability Reporting. Lockhart served in President George H.W. Bush's Administration as Executive Director (CEO) of

2774-469: The United States. Jeffrey Spector, a real-estate analyst at UBS , said that in markets with apartment buildings that compete with Archstone, "there is no question that if you need to sell assets, you will try to get ahead" of the Lehman selloff, adding "Every day that goes by there will be more pressure on pricing." Several money funds and institutional cash funds had significant exposure to Lehman with

2847-642: The advisory board to the Task Force for the Critical Review of the U.S. Actuarial Profession. Lockhart was born in White Plains, New York in 1946. He became an Eagle Scout at the early age of 13. He attended Phillips Academy in Andover, Massachusetts for four years where he became a good friend of George W. Bush. During his senior year he moved to St. Paul, MN as his father moved to become CEO of Conwed from being

2920-472: The agency at its conception, but departed after less than a year. OFHEO also published the house price index . This United States government–related article is a stub . You can help Misplaced Pages by expanding it . James B. Lockhart III James B. Lockhart III (born 1946) is an American U.S. Navy officer, business executive, and, since September 2009, Vice Chairman of WL Ross & Co , which manages $ 9 billion of private equity investments,

2993-535: The bank's rapid failure. Bank of America's rumored involvement also appeared to end as federal regulators resisted its request for government involvement in Lehman's sale. By Sunday, September 14, after the Barclays deal fell through, the news of impending doom swept through Lehman, and many employees arrived at the headquarters to clean out their offices. By Sunday afternoon, the government summoned Harvey Miller of Weil, Gotshal & Manges to file for bankruptcy before

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3066-457: The bankruptcy case of the parent company, and its portfolio management, research and operating functions remain intact. In addition, fully paid securities of customers of Neuberger Berman are segregated from the assets of Lehman Brothers and aren't subject to the claims of Lehman Brothers Holdings' creditors, Lehman said. Just before the collapse of Lehman Brothers, executives at Neuberger Berman sent e-mail memos suggesting, among other things, that

3139-545: The city had invested in HK$ 15.7 billion of "guaranteed mini-bonds " (迷你債券) from Lehman. Many claimed that banks and brokers mis-sold them as low-risk. However, bankers noted that the minibonds are indeed low-risk instruments since they were backed by Lehman Brothers, which until just months before its collapse was a venerable member of Wall Street with high credit and investment ratings, and many banks accepted minibonds as collateral for loans and credit facilities. Another HK$ 3 billion

3212-501: The company's possible sale. The New York Times reported on September 14, 2008, that Barclays had ended its bid to purchase all or part of Lehman and a deal to rescue the bank from liquidation collapsed. It emerged subsequently that a deal had been vetoed by the Bank of England and the UK's Financial Services Authority . Leaders of major Wall Street banks continued to meet late that day to prevent

3285-448: The days following the attacks on September 11, 2001. This drop was exceeded by a 6.98% plunge on September 29, 2008. Lehman's bankruptcy was expected to cause some depreciation in the price of commercial real estate. The prospect for Lehman's $ 4.3 billion in mortgage securities getting liquidated sparked a selloff in the commercial mortgage-backed securities (CMBS) market. Additional pressure to sell securities in commercial real estate

3358-413: The entire capitalization spectrum, as well as new investment categories, such as international, real-estate investment trusts and high-yield investments. In addition, with the creation of a nationally and several state-chartered trust companies, the firm became able to offer trust and fiduciary services. In 2016, the firm had approximately $ 246 billion in assets under management . In October 1999,

3431-576: The fact that he had capped the growth of both Fannie and Freddie's mortgage portfolio for the first time and had “repeatedly called for legislative reforms to increase capital requirements, reduce the size of the Enterprises' portfolios and enhance regulatory authorities, including broadened authority to impose a conservatorship or receivership.” Lockhart worked closely with the Bush Administration and many housing and financial groups to help stabilize

3504-710: The financial system and the need for Congress to grant OFHEO additional regulatory powers. In December 2006, Lockhart wrote an article stating that Fannie Mae and Freddie Mac's “government charters enable these companies to take on more risk than other major financial institutions. In addition to their significant operational difficulties, the Enterprises have lower capital requirements than banks, massive investment and derivative portfolios, limited discipline from credit markets, an inability to diversify their investments and no limit on bank investments in their securities…Fannie Mae and Freddie Mac present very large systemic risks to financial markets and financial institutions. That's why it

3577-580: The firm conducted an initial public offering of its shares and commenced trading on the New York Stock Exchange , under the ticker symbol "NEU". In July 2003, shortly after the retired Mr. Neuberger's 100th birthday, the company announced that it was in merger discussions with Lehman Brothers Holdings Inc. These discussions ultimately resulted in the firm's acquisition by Lehman on October 31, 2003, for approximately $ 2.63 billion in cash and securities. On November 20, 2006, Lehman announced its Neuberger Berman subsidiary would acquire H. A. Schupf & Co.,

3650-415: The firm for financing. In an attempt to meet their own credit needs, Lehman Brothers International routinely re-hypothecated the assets of their hedge funds clients that utilized their prime brokerage services. Lehman Brothers International held close to $ 40 billion of clients assets when it filed for Chapter 11 Bankruptcy. Of this, $ 22 billion had been re-hypothecated. As administrators took charge of

3723-489: The firm's growth mirrored that of the asset-management industry as a whole. In 1950, it introduced one of the first no-load mutual funds in the United States, the Guardian Fund , and also began to manage the assets of pension plans and other institutions. Historically known for its value-investing style, in the 1990s the firm began to diversify its competencies to include additional value and growth investing , across

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3796-566: The first half of 2008 alone, Lehman stock lost 73% of its value as the credit market continued to tighten. In August 2008, Lehman reported that it intended to lay-off 6% of its work force, 1,500 people, just ahead of its third-quarter-reporting deadline in September. On August 22, shares in Lehman closed up 5% (16% for the week) on reports that the state-controlled Korea Development Bank was considering buying Lehman. Most of those gains were quickly eroded as news emerged that Korea Development Bank

3869-533: The government's ability to manage the crisis and prompted a general financial panic. Money market mutual funds , a key source of credit, saw mass withdrawal demands to avoid losses, and the interbank lending market tightened, threatening banks with imminent failure. The government and the Federal Reserve system responded with several emergency measures to contain the panic. As of May 2022, parent company Lehman Brothers Holdings, Inc. remained in liquidation before

3942-457: The growth of its investment portfolios for the first time. In a joint press conference with the SEC Chairman, Chris Cox, Lockhart announced a $ 400 million fine. Shortly thereafter, he obtained Freddie Mac's voluntary agreement to likewise cap the growth of their portfolio. From the beginning of his tenure as Director of OFHEO, Lockhart warned about the systemic risks Fannie and Freddie posed to

4015-577: The institutional cash fund run by The Bank of New York Mellon and the Reserve Primary Fund, a money market fund , both falling below $ 1 per share, called " breaking the buck ", following losses on their holdings of Lehman assets. In a statement The Bank of New York Mellon said its fund had isolated the Lehman assets in a separate structure. It said the assets accounted for 1.13% of its fund. The Primary Reserve Fund owned $ 785 million or 1.2 percent of its holdings in Lehman commercial paper. The drop in

4088-470: The legislation, entitled the Housing and Economic Recovery Act (HERA) until July 2008. President Bush, who had called for GSE reform throughout his Presidency, signed HERA into law in an Oval Office ceremony on July 30. However, HERA was passed too late as stock market, foreign debt and mortgage-backed securities investors worried about their solvency. Lockhart had pushed both GSE's to raise more capital for over

4161-550: The markets opened on Monday. Lehman Brothers filed for Chapter 11 bankruptcy protection on Monday, September 15, 2008. According to Bloomberg , reports filed with the U.S. Bankruptcy Court, Southern District of New York (Manhattan) on September 16 indicated that JPMorgan Chase & Co. provided Lehman Brothers with a total of $ 138 billion in "Federal Reserve-backed advances". The "Federal Reserve-backed advances" as provided by JPMorgan Chase were for $ 87 billion on September 15 and $ 51 billion on September 16. The filing remains

4234-524: The mortgage market, which was critical for the financial future of Fannie Mae and Freddie Mac as they owned or guaranteed $ 5.5 trillion of mortgages (57% of all US mortgages). In November 2008, Lockhart announced the Streamlined Mortgage Modification Program designed to prevent the rapidly growing delinquencies turning into foreclosures. He pushed both GSE's to be more creative and responsive in modifying mortgages. He testified at

4307-478: The past eight years. Despite Fuld's defense on his high pay, Lehman Brothers executive pay was reported to have increased significantly before filing for bankruptcy. On October 17, 2008, CNBC reported that several Lehman executives, including Richard Fuld, had been subpoenaed in a case relating to securities fraud. In March 2010, the report of Anton R. Valukas , the Bankruptcy Examiner, drew attention to

4380-630: The real estate components of the deal would be $ 1.29 billion, including $ 960 million for Lehman's New York headquarters and $ 330 million for two New Jersey data centers. Further, Barclays will not acquire Lehman's Eagle Energy unit, but will have entities known as Lehman Brothers Canada Inc, Lehman Brothers Sudamerica, Lehman Brothers Uruguay and its Private Investment Management business for high-net-worth individuals. Finally, Lehman will retain $ 20 billion of securities assets in Lehman Brothers Inc that are not being transferred to Barclays." Barclays had

4453-591: The release of critical oversight reports However, the White House withdrew the nomination of his successor, and he served as director beyond the end of his term as provided by law. On July 30, 2008, the Housing and Economic Recovery Act of 2008 combined OFHEO and the Federal Housing Finance Board (FHFB) to form the new Federal Housing Finance Agency (FHFA). OHFEO director James B. Lockhart III oversaw

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4526-459: The same day, on investors' concerns about the security of the bank. The U.S. government did not announce any plans to assist with any possible financial crisis that emerged at Lehman. On September 10, Lehman announced a loss of $ 3.9 billion and their intent to sell off a majority stake in their investment-management business, which included Neuberger Berman . The stock slid 7% that day. On September 12, Timothy F. Geithner , then president of

4599-408: The underlying mortgages. Whether Lehman did this because it was simply unable to sell the lower-rated bonds or made a conscious decision to hold them is unclear. In any event, huge losses accrued in lower-rated mortgage-backed securities throughout 2008. In the second fiscal quarter, Lehman reported losses of $ 2.8 billion and decided to raise $ 6 billion in additional capital by offering new shares. In

4672-452: The use of Repo 105 transactions to boost the bank's apparent financial position around the date of the year-end balance sheet . The New York attorney general Andrew Cuomo later filed charges against the bank's auditors Ernst & Young in December 2010, alleging that the firm "substantially assisted... a massive accounting fraud" by approving the accounting treatment. On April 12, 2010,

4745-505: The water at Neuberger Berman. I'm embarrassed and I apologize." Richard Fuld , head of Lehman Brothers, faced questioning from the U.S. House of Representatives ' Committee on Oversight and Government Reform . Rep. Henry Waxman (D-CA) asked: "Your company is now bankrupt, our economy is in crisis, but you get to keep $ 480 million (£276 million). I have a very basic question for you, is this fair?" Fuld said that he had in fact taken about $ 300 million (£173 million) in pay and bonuses over

4818-468: Was "facing difficulties pleasing regulators and attracting partners for the deal." It culminated on September 9, when Lehman's shares plunged 45% to $ 7.79, after it was reported that the state-run South Korean firm had put talks on hold. Investor confidence continued to erode as Lehman's stock lost roughly half its value and pushed the S&;P 500 down 3.4% on September 9. The Dow Jones lost nearly 300 points

4891-463: Was a counterparty to mortgage financier Freddie Mac in unsecured lending transactions that matured on September 15, 2008. Freddie said it had not received principal payments of $ 1.2 billion plus accrued interest. Freddie said it had further potential exposure to Lehman of about $ 400 million related to the servicing of single-family home loans, including repurchasing obligations. Freddie also said it "does not know whether and to what extent it will sustain

4964-534: Was acquired by General Reinsurance; Managing Director in Smith Barney 's Investment Banking Group for financial institutions and Co-Head of its Private Equity Group (1993–1995); Vice President and Treasurer of Alexander & Alexander(1981–1989); and Assistant Treasurer of Gulf Oil in Europe and the U.S. (1974–1981). Lockhart served as a member of the American Benefits Council's board of directors and on

5037-446: Was approved. Manhattan court bankruptcy judge James Peck, after a seven-hour hearing, ruled: "I have to approve this transaction because it is the only available transaction. Lehman Brothers became a victim, in effect the only true icon to fall in a tsunami that has befallen the credit markets. This is the most momentous bankruptcy hearing I've ever sat through. It can never be deemed precedent for future cases. It's hard for me to imagine

5110-417: Was feared as Lehman got closer to liquidating its assets. Apartment-building investors were also expected to feel pressure to sell as Lehman unloaded its debt and equity pieces of the $ 22 billion purchase of Archstone , the third-largest United States real estate investment trust (REIT). Archstone's core business was the ownership and management of residential apartment buildings in major metropolitan areas of

5183-535: Was invested in similar products, including derivatives. The Hong Kong government proposed a plan to buy back the investments at their current estimated value, which would allow investors to partially recover some of their loss by the end of the year. HK chief executive Donald Tsang insisted the local banks respond swiftly to the government buy-back proposal as the Monetary Authority received more than 16,000 complaints. On October 17, He Guangbe, chairman of

5256-586: Was its leverage ratio, a measure of the ratio of assets to owners equity, which increased from approximately 24:1 in 2003 to 31:1 by 2007. While generating tremendous profits during the boom, this vulnerable position meant that just a 3–4% decline in the value of its assets would entirely eliminate its book value of equity. Investment banks such as Lehman were not subject to the same regulations applied to depository banks to restrict their risk-taking. In August 2007, Lehman closed its subprime lender , BNC Mortgage, eliminating 1,200 positions in 23 locations, and took

5329-667: Was the Director (CEO) and Chairman of the Oversight Board of the Federal Housing Finance Agency (FHFA). He was the Director of the Office of Federal Housing Enterprise Oversight (OFHEO), which is now part of FHFA. He was nominated to that position by President George W. Bush , a friend of his from prep school, college and business school, and confirmed by the United States Senate in June 2006. He also served on

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