Chapter 22. Lessons from Lehman

“So I’m the schmuck?”

Richard Fuld, CEO of Lehman Brothers, on learning a rescue deal had fallen through1

The Lehman Brothers bankruptcy triggered a market melt-down. The U.S. government tried to show that it would no longer bail out risk-taking at every turn, only to find that it had left it too late to do so. As a result, money market funds suffered a “bank run,” which paralyzed markets across the world.

The events of September 14 and September 15, 2008, Wall Street’s lost weekend, passed into popular culture almost the moment they happened. It was the weekend when Lehman Brothers, the fourth largest U.S. investment bank, filed for bankruptcy; Merrill Lynch, the third largest, sold itself to Bank of America; ...

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