Even as President Barack Obama lauded the economic recovery of the five years since the collapse of Lehman Brothers, he admitted that the details surrounding the largest bankruptcy filing in U.S. history might be difficult to recall.
“It’s hard to remember everything that happened during those months,” Obama said.
In September 2008, the Dow Jones industrial average's 500-plus-point drop was the biggest since 9/11, and the economy began to backslide in ways the U.S. hadn't seen in decades.
"It's unconscionable what they did – or more accurately what they didn't do," Joseph Stiglitz, a Nobel Prize-winning economist and professor at Columbia University, told The Independent in 2009. "[Lehman Brothers] didn't do their homework. People were talking about the failure of Lehman Brothers from the moment of the failure of Bear Stearns in March, or before, and they didn't do a thing. If they knew there was systemic risk, why didn't they do anything about it?"
Now, five years after the U.S. economy was about to be sent into a tailspin, America Tonight offers some of the most interesting reads on the collapse of Lehman Brothers.
The Confidence Man by Hugo Lindgren, New York Magazine (June 15, 2008)
Almost three months before the bankruptcy filing was made official, Hugo Lindgren profiled hedge fund manager David Einhorn, who had called out Lehman Brothers on its shortcomings in the summer of 2008. In his conversations with Erin Callan, then-chief financial officer of Lehman Brothers, Einhorn recalled that Callan was being "evasive" and "dishonest" during his questions to her about the discrepancies in Lehman's financial filings. Then, Einhorn would make his doubts very public at a May 2008 conference, putting Lehman under the microscope months before the collapse.
"Dressed conservatively in a dark suit and tie, Einhorn explained that he was there to speak, despite the possibility of legal and personal attacks, because 'I believe it is important and the right thing to do.' The ratio of BlackBerrys to humans in the room was probably greater than one to one, and they all seemed to light up simultaneously. This was going to be good," Lindgren wrote. "Einhorn proceeded with a bracing analysis—including a recap of the Allied saga and a careful dissection of Lehman’s recent financial filing—that had all the moral fervor of a prosecutor’s closing argument. It was as if he were putting away a killer. His firm had a short position on Lehman Brothers, he maintained, not only because Lehman had fudged its numbers but because its recklessness had put the financial system as we know it at grave risk. He ended with a call to federal regulators to 'guide Lehman toward a recapitalization and recognition of its losses—hopefully before federal taxpayer assistance is required.'"