...career goals? Why do you think these steps are important in helping you progress? How can you focus your time and attention in future courses based on your career competencies and goals? Click the Assignment Files tab to submit your assignment. 2- Read Case Application 1, “Lessons from Lehman Brothers: Will We Ever Learn?” at the end of Ch. 5 of Management. Discuss the scenario with your team. Discuss the second, third, and fifth discussion questions at the end of the case with your team. Answer each question based on your team’s discussion in no more than 350 words per question. Click the Assignment Files tab to submit your assignment. 3-1. As a university student, your institution’s social principles and practices reflect on you, as a stakeholder, in the organization. Therefore, it is your right to question how these practices should be evaluated in relation to the social issues that your school is addressing. If your university was paying minimum wage when necessary and applying the minimum legal standards to its employees’ work environment, it would be said to have fulfilled its ________. social obligation social responsibility social responsiveness social expectation Bottom of Form Incorrect : An organization performs certain...
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...Working Paper Series Fall of Lehman Brothers – reasons why the failure could not be stopped Arif Ahmed South Asian Management Technologies Foundation August, 2011 1 Contents Abstract ............................................................................................................................................ 3 Background....................................................................................................................................... 4 Genesis of the Problem .................................................................................................................... 5 The Abettors of Failure..................................................................................................................... 9 Controls that failed ......................................................................................................................... 12 Preventing another Lehman........................................................................................................... 16 Conclusion ...................................................................................................................................... 19 Reference ....................................................................................................................................... 22 2 Abstract Failure of Lehman Brothers marks an important point of modern economic history. In a matter of eight months a successful and...
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...Abstract Lehman collapse was the largest bank bankruptcy in the United States history. Complex causes combination lead to this tragedy. This paper is going to illustrate primary causes that result in its failure, and also discuss impacts on financial systems supervision and regulations. TABLE OF CONTENTS 1. INTRODUCTION 1 2. LITERATURE REVIEW 4 3. RESEARCH METHODOLOGY 1 3.1 Data collection 2 3.2 Methodology x 3.3 Limitations 3 4. ANALYSIS AND DISCUSSION 4 4.1 5 4.1.1 4.1.2 4.1.3 4.1.4 4.1.5 4.2 4.3 6 5. CONCLUSION 1 6. REFERENCES 4 7. APPENDICES 1 8. ACKNOWLEDGEMENTS 1 1. INTRODUCTION The credit crunch occurred in 2008 has been arguably recognised as an extreme phenomenon during the financial crisis, which generated to the longest recession in the U.S. history since ‘the Great Depression’ in1929. Over 600,000 jobs lost in during 2008, and unemployment rate went up to 6.1% which was the highest point in 5-year time (Isidore, 2008). According to the Turner Review (2009), faultiness of regulation and supervision underpinned financial problems’ increase. Therefore, to illustrate the causes of Lehman Bother’s crash in 2008, events occurred during crisis progress are listed in Appendix 1. Among those serious cases, bankruptcy of Lehman Brothers was concerned to be the most typical...
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...Director Notes From Enron To Lehman Brothers Lessons for Boards From Recent Corporate Governance Failures by Frederick D. Lipman In order for boards to fulfill their oversight obligations, the organizations they serve must have robust whistleblower and compliance policies and programs to encourage reporting that can help identify risk exposures, fraud, or other illegal activity. This report identifies common pitfalls in many current whistleblower and compliance programs, and it offers recommendations on how audit committees can strengthen them. Government investigations, bankruptcy receiver reports, and numerous books provide a rich source of information about the major corporate disasters of the first decade of the twenty-first century. Although the financial implosions, starting with Enron and ending with Lehman Brothers, have significant differences, one common corporate governance theme can be seen: The board, and, in particular, the independent directors, did not have the information required to properly perform their oversight duties, even though such information was known to various members of management. In almost all the cases, the directors claimed they were misinformed or “duped” by the CEO or CFO.1 In this respect, these disasters were partly the result of corporate governance failure and, in particular, a failure to establish a robust whistleblower system as an internal control. Those 1 Frederick Lipman, Whistleblowers: Incentives, Disincentives and Protection...
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...between Anticommunism and McCarthyism. The media coverage during this period of American history is examined and the Red Scare is described. Anticommunism and McCarthyism are often referenced and described together when teaching this era in American history. Although there is a difference between the two, both terms are often misunderstood by many Americans. The Anticommunism and McCarthyism terms were created in the 1940s and 1950s and have become intertwined confusing many people concerning their meaning. The fact is that each of the terms is closely related, but there is a fundamental difference between the two definitions. Anti-communism is “a set of beliefs, social values, or political opinions that communism or a one party system form of government that holds all power, including the economy is not acceptable” (Baughman, 2001, p. 10). On the other hand, McCarthyism investigated and targeted “unfairly” individuals that were considered (suspected) communist, which in turn ruined the reputations of those suspected, and caused many employers, especially in Hollywood to place the name of a suspect on “the blacklist” because the employer feared risking his or her own reputation. During the 1950s and through the cold war, Senator Joseph McCarthy ruined and destroyed many innocent Americans and Hollywood actors. McCarthyism allowed the American...
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...relevancy of innovation in mitigating the impact of the crisis and how the managers can foster innovation * Identification and description of relevant motivation theory that the managers can usefully apply to motivate the employees during the crisis * Feedback & Advices Page 12 * Referencing Guide Page 13 dfsfjn Introduction The organization in crisis that we chose to report on is the “Lehman brothers”. On September 15, 2008, Lehman Brothers declared the largest bankruptcy in history and changed the American and global economy. The company’s investment banking and trading divisions were acquired by Barclays the next day. They were the fourth largest investment bank in the United States and they played an important role in the financial and commercial industries. The company begun in 1844 when Henry Lehman immigrated to the United States from Rimpar, Bavaria and settled in Montgomery, Alabama...
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...10/29/2014 10/29/2014 Matthew C Snee Matthew C Snee 2008 Sub-prime Crisis Financial Market Effects 2008 Sub-prime Crisis Financial Market Effects Matthew Snee 10/19/2014 Professor Fowlkes ECON 2408NA Describe and analyze the effect that the 2008 subprime crisis had on the stock, bond, and foreign exchange markets. I would like to begin with a brief introduction on a few events that led to the subprime mortgage crisis. After the tech bubble had burst and the terrorist attacks on September 11th 2001, the U.S. government made an attempt to stimulate the economy, so the Federal Reserve cut interest rates to dramatically low rates. Normally, people with poor credit or an unsubstantial credit history couldn’t get approved for mortgage loans, however, in an attempt to capitalize on the home buying craze, lenders were approving loans to just about anyone who applied for a mortgage loan. Investment firms would in turn buy lese loans, repackage them, and then sell them as mortgage backed securities. The majority of these mortgages were subprime mortgage adjustable rate loans, which initially were affordable loans, but after a certain period the payments would rise dramatically, and many of the borrowers who were risky to begin with defaulted on their loans. The defaults led to a financial meltdown that caused numerous banks to go bankrupt, and led to enormous losses for firms and hedge funds that marketed or invested heavily in risky mortgage-backed securities...
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...Daniels Fund Ethics Initiative University of New Mexico http://danielsethics.mgt.unm.edu Banking Industry Meltdown: The Ethical and Financial Risks of Derivatives INTRODUCTION The 2008–2009 global recession was caused in part by a failure of the financial industry to take appropriate responsibility for its decision to utilize risky and complex financial instruments. Corporate cultures were built on rewards for taking risks rather than rewards for creating value for stakeholders. Unfortunately, most stakeholders, including the public, regulators, and the mass media, do not always understand the nature of the financial risks taken on by banks and other institutions to generate profits. Problems in the subprime mortgage markets sounded the alarm in the 2008–2009 economic downturn. Very simply, the subprime market was created by making loans to people who normally would not qualify based on their credit ratings. The debt from these loans was often repackaged and sold to other financial institutions in order to take it off lenders’ books and reduce their exposure. When the real estate market became overheated, many people were no longer able to make the payments on their variable rate mortgages. When consumers began to default on payments, prices in the housing market dropped and the values of credit default swaps (the repackaged mortgage debt, also known as CDSs) lost significant value. The opposite was supposed to happen. CDSs were sold as a method of insuring against loss. These...
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...financial institutions and Lehman Brothers 8 D- Measures to mitigate financial crisis 11 E- Conclusion 15 F- References 17 A- Introduction The subprime mortgage crisis happened in the U.S. financial system into the most horrible recession from the time when the Great Depression. This report tracks how the subprime mortgage crisis outspread, disturbing first the housing sector and then the economy on the whole. When banks started lending to subprime borrowers, it looked immense. Unexpectedly, anyone could get a house through a mortgage loan, even with modest or no money down payment. Nevertheless not the entire of those mortgage borrowers were high-quality nominees for the mortgage loan. The defaults of these subprime mortgage borrowers helped lash out the subprime crisis. (Rudd, 2009). The circumstances of the mortgage markets became more deteriorated due to the involvement of Investment Banks in underwriting the mortgage loans. The amplified exploitation of the secondary mortgage markets by lenders further to the numeral of subprime mortgages lenders could create. As a substitute of gathering the originated loans on their financial statements, lenders were capable to plainly sell the loans in the secondary financial market and accumulate the originating charges. This untied up additional resources for still new lending positions, which amplified liquidity sources even added. The financial Institutions such as Bear Stearns and Lehman...
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...Part A: 1. Introduction The Financial Crisis of 2007-2010 is often cited as the most significant downturn in the economy since the Great Depression of the 1930s. It erupted on August 9, 2007 and spread throughout the advanced market economies such as the US and the UK. The Financial crisis of 2007 is notably different from other crises we faced, for instance Anthony Herbst and Joseph Wu (2009) argued that ‘the financial crisis of this first decade of the 3rd millennium has features that make it both severe and somewhat intractable’. The crisis is argued to be not exogenous to our capitalist economic system, since it is intimately connected to financial innovation and de-regulation in financial markets. Furthermore, as Herbst and Wu (2009) advocate, ‘the current pandemic’ should be discussed in the light of ‘the political wrapper surrounding many aspects of it, and the threads running through it’. The economic situation and financial behaviour are always affected by political realm, so it is also necessary to consider political factors in evaluation of the crisis. General causes of this crisis are still being debated in the academic literature, and this paper aims to provide a relatively comprehensive outlook on the most common and empirically successful accounts of factors that contributed to the crisis. This report is organised as follows: part 1 provides a brief introduction to the current financial crisis; part 2 briefly evaluates the possible causes; part 3 examines whether...
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...Table of Contens Introduction 2 1. Foundation of Euro Zone 2 1.1. Background 2 1.2. Optimum Currency Area 3 1.3. Is Europe an Optimum Currency Area? 5 2. Account imbalance in Eurozone 6 2.1. Captial inflow from outside of eurozone 7 2.2. Bond interest rate convergence after eurozone introduction, it increase raising capital of periphery countries. 10 2.3. Price and unit labor cost increase in periphery countries -> competitiveness loss 11 3. Lehman Brothers 14 3.1. Reasons for Bankruptcy 14 3.2. LEVERAGE 15 3.3. LIQUIDITY 15 3.4. LOSSES 15 3.5. Final words 16 4. Greece Financial Crisis 16 4.1. Current Greece Financial Crisis 16 4.2. Greece before Financial Crisis 18 4.3. Industry 19 4.4. Tax Evasion 20 4.5. Populism and Corruption 22 5. Conclusion 23 5.1. Fundamental defect in the euro area – The impossible of independent monetary policy worsen the Economic Crisis of Europe. 23 5.2 Fundamental defect in the euro area – The Eurozone, which was established without financial alliance makes the financial crisis to the banking crisis. 26 REFERNECES 28 Introduction In June, whole world paid attention to Greek economic crisis. Greece, had undergone crisis because of financial crisis from United States since 2008, has evaded a default with two times of relief loans from European Commission (EC), European Central Bank (ECB), and International Monetary Fund (IMF). But Greece announced that they couldn’t pay back the loan to IMF...
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.... UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ x : In re : : LEHMAN BROTHERS HOLDINGS INC., : et al., : : Debtors. : ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ x Chapter 11 Case No. 08‐13555 (JMP) (Jointly Administered) REPORT OF ANTON R. VALUKAS, EXAMINER March 11, 2010 Jenner & Block LLP 353 N. Clark Street Chicago, IL 60654‐3456 312‐222‐9350 919 Third Avenue 37th Floor New York, NY 10022‐3908 212‐891‐1600 Counsel to the Examiner VOLUME 1 OF 9 Sections I & II: Introduction, Executive Summary & Procedural Background Section III.A.1: Risk EXAMINER’S REPORT TABLE OF CONTENTS VOLUME 1 Introduction, Sections I & II: Executive Summary & Procedural Background Introduction ...................................................................................................................................2 I. Executive Summary of The Examiner’s Conclusions ......................................................15 A. Why Did Lehman Fail? Are There Colorable Causes of Action That Arise From Its Financial Condition and Failure?..................................................................15 B. Are There Administrative Claims or Colorable Claims For Preferences or Voidable Transfers...
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...Banking Industry Meltdown HRM 522/ Professor Huddleston 2013 August 22 Banking Industry Meltdown 1 Determine which moral philosophies (as discussed in chapter 6) are most applicable to an understanding of the banking industry meltdown. Explain your rationale. To suggest which moral philosophy is most applicable to this case we must have an understanding of moral philosophies. One definition given is that “Moral philosophy is the study of moral judgments or the value that is placed on decisions about what is right or wrong” (http://www.smallbusiness.chron.com). With this being said, one must understand that there is a difference between moral philosophies and business ethics. When we refer to an individual’s principles and values which help to define and determine what is considered to be moral or immoral, this is known as moral philosophy. Business ethics is usually based on decisions in groups or those made when carrying out tasks to meet business objectives (Fraedrich/Ferrell, page 151). We can use moral philosophies as guidelines or a blueprint to aid in “determing how conflicts in human interests are to be settled and for optimizing mutual benefit of people living together in groups” (Fraedrich/Ferrell, page 151). Moral philosophies also used in the business world to formulate business strategies as well as a way of resolving ethical issues. The moral philosophies used in business decisions are teleology, deontology, the relativist perspective, virtue ethics...
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...Derivative triggered the financial terror Jiho Jang Warren Buffett already said the derivatives “financial weapons of mass destruction.” It’s not surprising. The derivative products have triggered the most destructive financial crisis since the stock market crash in our history. The causes of financial crisis in the late 2000s are still controversial. Some assert that it is just the financial system, and regulation failure and the other insist that resulted from the financial engineering failures. The explosive growth in derivative contracts occurred after 1999 when the Glass-Steagall Act was repealed, which allowed banks to operate as brokerage. Glass-Steagall, adopted in 1933, separated brokerages and banks to ensure banks would no longer be involved in risky transactions. And credit rating agencies were slow to downgrade the credit rating of the securities. Because the rating agencies did not disclose the downgrades in time, many investors were misled to think that securities were still safe to invest in, and it accelerated the market crisis uncontrollably. The initial intention of derivatives was to defend against risk and protect against the losses and downside. However, derivatives were the most important tools to trigger the financial market collapse. Those tools usually used to take on more risk to maximize profits and returns rather than to defend against risk and to protect against the losses. All kinds of financial products are transferred to the...
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...Thomas E. Augustyn Iowa School of Banking 2009 Intersession Project Banking Regulation Summary There is one legislative issue which will be ultimately responsible for the future direction and degree of bank regulation. This issue is the management/regulation of the financial services industry that contains “systemically relevant” (aka “too big to fail”) firms. Management & regulation goals must be 3-pronged: 1. It must be strong enough to prevent the failure of “systemically relevant” firms (without artificial outside support)or provide for a less-traumatic winding down of a “systemically relevant” firm. 2. It must prevent the emergence of more “too big to fail” firms 3. It must not be so stifling as to prevent the controlled growth of safe and profitable financial service businesses. Analysis Up to 1999, banking regulation had been fairly constant since the Great Depression ended. The Golden Rule had been the Glass-Steagal Act. The Glass-Steagall Act, was passed by Congress in 1933 and prohibited commercial banks from engaging in the investment business. It was enacted as an emergency response to the failure of nearly 5,000 banks during the Great Depression. The act was originally part of President Franklin D. Roosevelt’s New Deal program and became a permanent measure in 1945. It gave tighter regulation of national banks to the Federal Reserve System; prohibited bank sales of securities; and created the Federal Deposit Insurance Corporation (FDIC), which...
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