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Broader Lessons From Lehman Brothers' Bankruptcy Sep 08
Standard & Poors, Sep 2008
Abstract
The events of the past two weeks led to three outcomes for troubled financial institutions in the U.S.: regulatory intervention (Fannie Mae and Freddie Mac); merger (Merrill Lynch & Co. Inc.); or bankruptcy (Lehman). The markets have yet to see a fourth outcome in this cycle: recovery. After all, as in previous cycles, we believe some of the strongest and best-positioned institutions will recover and eventually thrive once again. The bankruptcy filing by Lehman Brothers Holdings Inc. (LBHI), the largest among financial institutions in U.S. history, has led us to three major conclusions: Some companies are indeed not too big to fail; While the availability of liquidity can provide some form of short-term life support to an institution under severe...
Companies mentioned in this report are: Merrill Lynch & Co. Inc.,Fannie Mae,Lehman Brothers Holdings Inc.,Freddie Mac
Standard and Poors RatingsXpress Credit Research provides in-depth coverage of international corporates, financial institutions, insurance companies, utilities, sovereigns and structured finance programs. RatingsXpress Credit Research lets users determine the credit rating of holdings and identify key factors underlying an issuer's creditworthiness, distinguishes the different risk exposures for new and existing deals, and provides an understanding of how their analysts interpret key regulatory, political and environmental events and their economic impact.
Research Type: Commentary
Criteria articles describe the thought process and methodology Standard & Poor's analysts use in determining ratings. These commentary pieces discuss both the quantitative (economic and financial) and qualitative (business analysis and caliber of management) aspects of the analysis, as well as legal issues.
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