Lehman: Final Words

Leverage ratios of investment banks

Image via Wikipedia

What has always mattered most to financial firms are base capital amounts and leverage. Plunging headlong into both residential and CRE funding in a mad dash for profits led to firm’s having too little of the former and too much of the latter. That, in the simplest of terms, is why Lehman died. Everything else written about the deceased is merely noise . .

via Lehman: Doomed By Short Term Funding | The Big Picture.

With every crisis, it takes a while for all the analysis to occur and all of the theories to be advanced and examined. But sooner or later we reach a conclusion that fits the facts and the final words are written.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: