Summary of History Credits Lehman Brothers’ Collapse for the 2008 Financial Crisis. Here’s Why That Narrative is Wrong.
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In 2008, Lehman Brothers had not planned for a worst-case scenario, because it assumed that regulators would step in to prevent its bankruptcy. Therein lay the problem, according to professor David Skeel in this thought-provoking reconsideration of Lehman’s role in the financial crisis. While the financial system looks better prepared today to weather future tumult, market expectations about potential government intervention remain consequential. This intriguing article makes an important contribution to policy debates on pending laws for distressed bank resolutions.
In this summary, you will learn
- What the conventional wisdom says about Lehman Brothers’ role in the 2008 financial crisis,
- Why this depiction is wrong and
- Why the persistence of this misconception could undermine policy measures to mitigate future crises.
About the Author
David Skeel is a professor of corporate law at the University of Pennsylvania Law School.