Why did we do this?
It was fun for a while
And boom went Lehman
The events on Wall Street the weekend of September 13 and 14, 2008 were described as “the most extraordinary events I’ve ever seen” by Peter Peterson, co-founder of the Blackstone Group (NYT Article). Within a number of days, Merrill Lynch was sold to Bank of America, insurance company AIG was bailed out by the government, and Lehman Brothers filed for Chapter 11 bankruptcy. Weeks before the government bailed out Fannie Mae and Freddie Mac, they also helped construct the deal helping JP Morgan acquire Bear Stearns.
After exploring Enron’s collapse and eventually bankruptcy in Paper 1, I decided to stay on topic and analyze a second, more recent bankruptcy in Lehman Brothers. I hope to maybe somehow find a link between the two to help support my White Paper, but that remains to be seen. What I plan to research in Paper 2 are decisions Lehman Brothers made leading up to and during the subprime mortgage crisis that lead to their collapse. I believe the ethical theory of utilitarianism is apparent in Wall Street leading up to the Great Recession. These big banks including Lehman were making decisions to maximize their utility, or happiness; and to do that they wanted to bolster their bottom line. What these banks failed to realize before it was too late was that this wasn’t sustainable, ethical, or smart.
There are many questions that I hope to answer regarding the Great Recession, including: Did everyone involved know they were contributing to the mortgage crisis as a whole? Did the culture of Wall Street foster a certain ethical ideology that contributed to the crisis? And how could these big banks, especially Lehman Brothers been more socially responsible to avoid and survive the crisis?