Lehman Brothers, the fourth largest financial institution in the USA, which was founded by three Bavarian Jewish brothers in 1850 and remained under the control of this family until 1964, declared bankruptcy on September 15, 2008. This bankruptcy led to the growth of the world financial crisis.
Henry, one of the Lehman brothers whose father made a living by trading cattle in the Bavarian region of Germany, settled in the USA in 1844 when he was 23 years old. Henry started doing business in Alabama and opened a store there under the name 'H Lehman'. With the arrival of the middle brother Emanuel in 1847 and the younger brother Mayer in 1850, they changed the name of the store to 'Lehman Brothers'. Thus, Lehman Brothers company was established.
The most important product in the USA in the 1850s was cotton, and it changed hands like cash. Since a significant portion of their customers gave cotton in exchange for the products they purchased, cotton trading automatically became one of the main business lines of the Lehman brothers.
Lehman Brothers Inc. was an American global financial services firm founded in 1850. Before filing for bankruptcy in 2008, Lehman was the fourth-largest investment bank in the United States (behind Goldman Sachs, Morgan Stanley, and Merrill Lynch), with about 25,000 employees worldwide. It was doing business in investment banking, equity, fixed-income and derivatives sales and trading (especially U.S. Treasury securities), research, investment management, private equity, and private banking. Lehman was operational for 158 years from its founding in 1850 until 2008.
In 1858, when the center of the cotton trade moved from Alabama to New York, the company opened its first office in Manhattan. Lehman Brothers was among the founders of the Cotton Exchange, which opened in 1870, the Coffee Exchange, which opened in 1883, and finally the New York Stock Exchange-NYSE, which opened in 1887.
After 1906, under the leadership of Philip Lehman, the company took important steps towards becoming a financial institution. It listed many companies along with other financial institutions. The first person from outside the family to join the board of directors of the company, which is still a family business, was John M Hancock in 1924. In 1925, Robert 'Bobbie' Lehman's 44-year-long reign at Lehman Brothers began. When Robert Lehman died in 1969, there was no family member to run the company. The company, which had gone through a few difficult years, finally breathed a sigh of relief in 1973 when Pete Peterson was appointed CEO of the company.
There was no one from the Lehman family in the management of the company anymore, and under the leadership of Pete Peterson, the era of mergers and acquisitions began at Lehman Brothers. The company acquired Abraham & Co. in 1975 and merged with Kuhn, Loeb & Co. in 1977, becoming the country's 4th largest investment bank after Salomon Brothers, Goldman Sachs, and First Boston.
The company, which changed many CEOs and survived with many acquisitions and mergers until 2008, continued its growth and its dominance in the financial markets. The company, headquartered in the World Trade Center, suffered a major blow during the September 11 attacks. The company, which lost one of its employees in the attacks, was suddenly left on the street with its 6,500 employees. Lehman Brothers was fully ready when the financial markets reopened on September 17, thanks to the successful crisis management of the company management.
The beginning of the end for Lehman Brothers came with the 'mortgage' crisis in America. Although the company seemed to be doing well at first, declaring a profit of $489 million in the first quarter of 2008 while its competitors reported losses, it caused panic among investors by announcing a loss of $2.8 billion in the second quarter. This loss was the first loss balance sheet announced by Lehman Brothers in fifteen years. On September 13, when the FED requested a special meeting regarding the future of Lehman Brothers, the company stated that it was in talks with Bank of America and Barclays for a possible sale. However, when these negotiations did not yield any results, he declared bankruptcy on September 15, 2008.