Lehman Brothers is the highest profile casualty of the credit crunch in the US. Experts portray it as a classic case of over-confidence in a game of chance. Essentially, the company it tried to finance too many risky assets with too little capital.
Those toxic mortgage-related assets proved unpalatable for potential buyers.
One market analysts said: “Lehman like so many other investment banks and banks really got caught up in the housing bubble, but like every bubble, the bubble ended and we’re seeing the downside of that bubble.”
US authorities have already intervened to come to the aid of mortgage giants Fanny Mae and Freddie Mac. But analysts say there is only so much the government can, and should, do to help struggling institutions.
Troubled insurer AIG has now reportedly asked the Fed for a lifeline.
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