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Index

9/11 5
1987 stock market crash 5, 204
ABCP (asset-backed commercial paper) market 57
ABS (asset-backed securities) 18, 169, 173
ABX indices 57, 166, 176, 219
acquisitions (Lehman's) 7, 10
Adelphia 180
Adrian, Tobias 62
Age of Turbulence, The (Greenspan, 2007) 204
aggressive growth strategy 10, 90, 149, 156, 190
Agius, Marcus 45
AIG (American International Group) 46, 52, 60, 65, 69, 171, 176, 185
AIG Financial Products (AIGFP) 177
Alt-A loans 9, 21, 26, 98
Alvarez & Marsal 113, 122
American Express 4
Anderson, Jamie 62
anti-deprivation 121
Antoncic, Madelyn 150, 154, 189
appraisal and valuation guidelines 135
Appraisal Foundation 160
Archstone
and Antoncic 150
asset valuation 101, 133, 141
and Barclays 46
Lehman acquisition of 26
and Lehman bankruptcy 109
and risk limits 155, 156, 190
Asian financial crisis 5
asset valuation
bankruptcy and the destruction of value 113
and CDOs 166
derivative transactions 120, 166
disruptions in the market 102
efficient market hypothesis 203
fair value accounting 96
lack of independent valuation 139
Lehman's asset valuation 99, 133
markets, prices and value 221
assets to equity ratios 38
AT&T 6
auction for CDS recovery 119, 174
audit procedures 31, 180, 191, 194, 196
Aurora Loan Services LLC 9, 11
automatic stay protection 117, 121, 123
AvalonBay 112
Ayotte, K 123
Bagehot, Walter 218, 220
bail-outs, see also AIG; Bear Stearns
generally 65
‘no bail-out’ message 43, 64, 72
potential Lehman bail-out 60
balance sheet limits 156, 190
Bank Holding Act (1956) 75
bank holding companies (BHCs) 27, 75, 82, 109, 120, 194, 198
Bank of America
and Archstone 109, 141
board 192
as buyer for Lehman 42, 45, 50, 62
and CDSs 175
as complex institution 194
and Countrywide 55
and Federal Reserve corporate governance guidance 198
and Lehman 219
and Merrill Lynch 47
and the OTC derivatives market 125
and the PDCF 24
Bank of England 131
bankruptcy
and CDS settlement 174
and the destruction of value 113
in Europe vs. USA 115, 121
Lehman comes out of 125
Lehman goes into 51, 62, 70, 89
multiple proceedings 113
procedures changed post-Lehman 128
Bankruptcy Code (US) 121, 128
Bankruptcy Report, see Examiner's report
Barclays
and Archstone 109, 112, 141
Barclays Capital (BarCap) 46, 108, 116, 117, 122, 141
as buyer for Lehman 43, 44, 47, 48
and CDSs 175
and the OTC derivatives market 125
and the PDCF 24
purchase of North American Capital Markets 116
Barron's article 111
Barry, Andrew 111
Barsanti, Anthony 105, 106, 134, 135
Basel Corporate Governance Principles 199
Basel II 28, 30, 32, 36, 49, 83, 85
Baxter, Thomas 51, 53, 54, 115
Bear Stearns
asset valuation 146
and Basel II 33
board 192
and bridge equity 108
and CDOs 55
and CDSs 175
collapse of 16, 24, 28, 33, 36, 39
and the Federal Reserve 57, 61
and the fixed income business 9, 10
and the Gramm-Leach-Bliley Act 81
and liquidity risk 36
and the ‘panic of 2007’ 57
and the SEC 29
William Dudley on 67
Becker, Gary 209
‘bed and breakfasting’ 91
Beeson, Lisa 110
behavioural finance theories 211
benchmark interest rates 67
Bent, Bruce 71
Berlind, Roger 192
Bernanke, Ben
on bridge equity 108
on the confidence crisis 218
and the Freedom CLO 22
lack of understanding of effects 38, 120, 150
and the Lehman bail out 17, 43, 60, 62, 64, 65, 67, 69, 72
purchase of Bear Stearns 16
on Repo 105 95
and subprime lending 38
Bhatia, Prashant 98
Big Bang 172
BIS (Bank for International Settlements) 118, 119, 120
Blackrock 26
Blankfein, Lloyd 46, 47
BNC Mortgage 9, 11, 15
BNP Paribas 24, 57, 125, 146
board (Lehman's)
duties under Delaware law 155, 179, 183, 190
effectiveness of 188, 200
Examiner's conclusions on 188, 190
list of board members 223
personal liability 184, 191
quality of 192
and risk 157, 179
boards (generally), see corporate governance
bridge equity 100, 101, 107, 110, 141, 156, 190
bridge loans 17, 46
Brodows, William 59
‘bubbles’ 212
Buffet, Warren E 6, 210
Buiter, Willem 23
Bullard, Mr 69
Bush, George W 61
business judgement rule 184, 188
buyers, Lehman Brothers seeks 25, 42, 63
Cable, Vince 80
Californian Public Employees Retirement System (CalPERS) 200
Callan, Erin 19, 20, 89, 97
cancellations of business 115, 117, 119, 120
Cap*105 capitalization method 139, 140
capital gains tax (CGT) 91
capital-intensive banking model vs. brokerage model 11
Caremark International (1996) 183, 187
Carlyle Capital Corporation (CCC) 16
cash concentration accounts 89
cash sweep, nightly 114
‘casino banking’ 80
Cassano, Joe 177
CDO (collateralized debt obligations) 18, 20, 30, 55, 81, 146, 165, 219
CDO Evaluator 169
CDS (credit default swaps) 17, 29, 56, 66, 118, 166, 167, 171, 219
chairman/ CEO separation 193, 199
Chapman, Peter 5
Chapter 11, see bankruptcy
Chicago School 206, 209
Chief Audit Executive (CAE) role 196
Chief Risk Officer (CRO) role 196
Chrysler Building 5, 108
Citibank 20, 32, 44, 108
Citicorp 73
Citigroup 4, 24, 55, 80, 99, 170, 192, 198, 219
civil liability 184
Clark, Tim 55
clearing houses 129, 147
CLO (collateralized loan obligations) 37, 99, 165
close-out netting 122
Cochrane, John 207
cognitive psychology 213
Cohen, Jonathan 104, 106
Cohen, Kenneth 106, 134
Colby, Robert 28, 86
‘colorable’ claims 89, 99, 155, 188, 189, 190
Combined Code 199
commercial paper 2, 30, 38, 55, 58, 71, 119
commercial real estate (CRE), see also Archstone; SunCal
in 2008 41, 42, 45
and the bankruptcy process 25, 89, 90, 97
and CDOs 18
guidelines on valuation 135
Lehman Brothers move into 5
Lehman's exposure vs. other investment banks 11, 108
and Lehman's risk management 149, 152, 189, 190
measuring value 159
valuation of 99
Commonwealth Bank of Australia 55
comparison method 161
compensation arrangements 4, 12, 193, 223
concentration limits 155, 189
confidence crisis 29, 56, 66, 118, 146, 218
Consolidated Supervised Entities (CSE) 27, 39, 55, 58, 82, 153, 164
consortium approach to saving Lehman 25, 43, 47, 50, 62
copula function 167
Cordell, L 170
corporate bonds 9, 171, 175
corporate governance
after 2002 179
corporate structure diagram 228
Delaware's General Corporation Law 155, 179, 183, 191
NYSE listing rules 182
risk management 150
and the Sarbanes-Oxley Act (2002) 179
strengthening corporate governance post-2008 192
‘too big to manage’ 13, 130
weak corporate governance and the financial crisis 192
Corrigan, Gerald 60
cotton trading 1
‘countercyclical growth strategy’ 157, 191
Countrywide 43, 46, 55, 57
Cox, Christopher 28, 30, 32, 35, 38, 43, 48, 49, 51, 61
Credit Enhanced Leverage Fund 29
credit impairment 106
credit ratings 23, 30, 42, 55, 66, 69, 71, 94, 119, 174
Credit Suisse 6, 46, 125
Credit Valuation Group 166
Crossroads Group 8
CSE (Consolidated Supervised Entities) 27, 55, 58, 82, 153, 164
‘culture of ownership’ 12
currency swaps 118
Curry, Thomas 194
customer flow model 8
Darling, Alistair 48, 50, 52
Davis, Michele 43, 62, 64
dealer-to-dealer trades 125
debt rollover 11
Delaware's General Corporation Law 155, 179, 183, 191
Depository Trust and Clearing Corporation 126, 175
derivative transactions
CDOs 165
CDSs 171
and consolidated supervision 29
and the destruction of value 113, 117, 118
and the effects of Lehman failure 51, 56, 66
and the Gramm-Leach-Bliley Act 79
ISMA's Master Agreements 120
measuring value 159
Derivatives Policy Holding Group 33
Deutsch, John 192
Deutsche Bank 108, 125
development projects 104, 105, 107, 134, 159, 160
Diamond, Robert 43, 45, 47, 48, 50, 52
Dimon, Jamie 46, 47
disclosures 147
discount window 75, 76
discounted cash flow method (DCF) 97, 139, 148, 163
distressed sales 45, 70, 107, 147
Dodd-Frank Act 80, 128, 192, see also Volcker rule
Dougan, Brady 46
Dudley, William 56, 67
due diligence 43, 44, 48, 51, 81
Duffie, Darrell 124
duty of care 126, 182, 186
duty of loyalty 187
duty to monitor 187
earnings call 97, 112, 133
Econometrics of Financial Markets, The (Campbell et al, 1997) 211
Economic Policy Review 124
economic theory 203
EEA (European Economic Area) 82, see also EU (European Union)
EESA (Emergency Economic Stabilization Act) 144
EF Hutton 4
efficient market hypothesis 203, 223
Ehrman, Daniel 122
Ehrman, Frederick 2
Einhorn, David 18, 19, 99, 146, 220
Elieff, Boris 107
employee layoffs 24
employee relations 12, 19
Enron 180, 182
equity bridge financing, see bridge equity
equity market collapse 72
Ernst & Young 89, 95
escrow accounts 111, 183
EU (European Union), see also Lehman Brothers International Europe (LBIE)
consolidated supervision 30, 35, 78, 82, 85
EU Directive 2002/87/EC 43, 82, 85
European Central Bank 21
event determination committee 172
Examiner's report 57, 89, 99, 134, 139, 150, 154, 159, 164, 184
export markets 72
fair value accounting 26, 96, 127, 139, 142
Fair Value Measurements Standard 96, 134, 142
Fama, Eugene 206, 207, 208, 209, 210, 221
Fannie Mae 54, 68, 75, 81, 110, 141
FASB (Financial Accounting Standards Board) 96, 142, 143, 147
FCIC (Financial Crisis Inquiry Commission) 32, 53, 60, 116, 177
FDIC (Federal Deposit Insurance Corporation) 74, 76, 129, 133, 144, 165, 194
Federal Home Loan Bank System 74
Federal Loan Act 17
Federal Open Market Committee (FOMC) 39, 54, 56, 57, 67
Federal Register 82, 84
Federal Reserve
and AIG 52
and Bear Stearns 16, 43
and bridge equity 108
and commercial paper 119
and corporate governance 179
and Lehman 43, 47, 49, 51, 60, 95
and liquidity risk 28
Primary Dealer Credit Facility 20, 37
and recession 67
as regulator 32, 39, 53, 76, 77, 133, 164
and revisions to bankruptcy proceedings 129
role in collapse of Lehman 53
strengthening corporate governance post-2008 195, 197
and subprime lending 38
supervisory oversight of FHCs 21
Term Securities Lending Facility 20
understanding of global implications 66, 113
Federal Reserve Bank of New York (FRBNY) 16, 21, 44, 48, 51, 54, 63, 66, 115, 175
Fender, Ingo 176
Finance America LLC 9
Finance and Risk Committee 152
financial holding companies (FHCs) 27, 76, 82
financial information, problems with 117, 123, 126, 131, 139, 140, 149, 181
Financial Institutions Reform, Recovery and Enforcement Act (1989) 135, 160
Financial Services Authority (FSA) 47, 48, 50, 114, 203
‘fire sales’ 52, 59, 92, 106
First Boston 6
Fisher, Richard 67
‘fit and proper’ test 192
fixed income business 6, 9, 10, 31, 116
Fixed Income Division (FID) 101, 154
Fleming, Michael 128
Flowers, Chris 46
Fooling Some of the People All of the Time: a Long Short Story (Einhorn, 2008) 19
Franks, Tommy 192
Frantz, Blaine A 9, 42
Freddie Mac 54, 68, 75, 81, 110, 141
‘Freedom CLO’ 21
French, Ken 210
Fuld, Richard (Dick)
in 2008 15, 17, 19, 21, 26
acquisitions 7
and the aggressive growth strategy 10, 11, 157
on American Express takeover 4
on Antoncic 150
on asset valuation 97
as CEO in 1990s/ 2000s 4
change in management style 12
committment to work 6
communication skills 3
conforming with formal requirements 191
and the ‘countercyclical growth strategy’ 157
dominance of 1, 200
Examiner's report on 89
the ‘gorilla’ 12
lack of understanding of effects 42, 150
Lehman bankruptcy 41, 42
and Lew Glucksman 2
powers as CEO 200
presentation of final report 41
reducing net leverage ratio 94
remoteness 12
on risk management 15, 157
on use of Repo 105 94
functional regulation principle 77, 79
‘funded exposure’ 111
GAAP (Generally Accepted Accounting Principles) 96, 182
‘gap risks’ 151
Gaussian Copula Model 167
Geithner, Timothy
and Bear Stearns 16, 17, 67
on Fuld 42
and the Lehman bail out 43, 60, 62, 65
and Lehman bankruptcy 45, 54, 56, 57, 72, 102
Gelband, Michael 154, 189
Glass-Steagall Act (1933) 73, 74, 80, 81
global implications of Lehman failure 66, 113, 115, 117, 118, 203
Global Risk Management Division 134, 150, 189
Glucksman, Lew 2
GMRA (Global Master Repurchase Agreement) 93
Goldfarb, Dave 7
Goldman Sachs
asset valuation 56
as bank holding company 27, 120
board 192
and bridge equity 108
and Federal Reserve corporate governance guidance 198
and the Gramm-Leach-Bliley Act 81
and Lehman 7, 9, 46
leverage ratios 38
and the OTC derivatives market 125
and the PDCF 24
and the SEC 31
Golub, Harvey 4
Gorton, Gary 178, 218
Government Sponsored Enterprises (GSEs) 145
government-sponsored wind-down 116
Gowers, Andrew 12, 200
Gramm-Leach-Bliley Act 1999 (GLBA) 27, 73
Great Depression 2
Greenlight Capital 18, 19
Greenspan, Alan 65, 129, 204, 222
GREG (Global Real Estate Group) 100, 101
Gregory, Joe 12, 19
Gregory, Jon 168
Grieb, Edward 94
gross negligence 184
Grundhofer, Jerry 191
guaranteed assets 49, 146
Guerrera, F 192
gut feeling valuations 104, 134
haircuts 22
Harlow, Kirsten 55
hedge funds
Carlyle Capital Corporation (CCC) 16
Credit Enhanced Leverage Fund 29
Greenlight Capital 18, 19
High-Grade Structured Credit Fund 29
and jurisdictional barriers 119
Lehman and the London Stock Exchange 114
NAV triggers 66
High-Grade Structured Credit Fund 29
Hirtle, Beverly 62
historical cost-based valuation methods 139, 140, 145
history of Lehman Brothers 1
House Committee of Government Oversight and Reform 205
House Committee on Financial Services 39, 69, 94, 95, 188
House of Representatives Committee on the Judiciary 116
house price appreciation scenarios (HPA) 170
housing downturn 15, 81, 98, 107, 145, 170, 177
HSBC 219
Hughes, William 110
Hyung Lee 94
independent board directors 193, 197, 200
independent valuation 160
individual investors and behavioural finance 214, 222
indolence 187
Industrial 27
industry group, formation of 59
inflation 39, 67
information, problems with 117, 123, 126, 131, 139, 140, 149, 181
Institute of International Finance 191
interagency appraisal and valuation guidelines 135
interbank lending 57, 71, 131, 218, 220
interest rates 72, 127
internal audit 194, 196
International Emergency Economic Powers Act 1977 61
international offices (Lehman's) 12
International Valuation Standards Council 160
Intex Cash Flow engine 166
intrinsic value 221
investment banking
and CDOs 167
and fair value accounting 145
and the Gramm-Leach-Bliley Act 75
investment banks and FHCs 77
investment banks vs. commercial banks 73, 76
Lehman used same model as others 90
outside the commercial real estate ‘Guidelines’ 109, 138
regulatory gap in asset valuation 133
role of investment banks 76
term ‘investment bank’ in the Federal Register 82
investment management services 8
Ira W Sohn Investment Research Conference 18
IRR (internal rates of return) 104, 106, 139, 163, 164
irrational behaviour 213
Isaac, William 144
ISDA (International Swaps and Derivatives Association) procedures 119, 120, 173, 175, 178
ITT Corporation 5
Jack, Bradley H 5, 6
job losses 24
Joint Chapter Plan 128
Joint Economic Committee 38, 39
‘joint hypothesis problem’ 207, 208
JP Morgan
asset valuation 147
and Bear Stearns 16, 61
and bridge equity 108
credit default swaps (CDSs) 168
and the Gramm-Leach-Bliley Act 81
history of 1
and Lehman 9, 42, 43, 44, 99, 219
JP Morgan Chase
and Bear Stearns 16
board 192
as complex institution 194
and Federal Reserve corporate governance guidance 198
and Lehman 32, 46, 48, 62
and OTC derivatives 125
and the PDCF 24
Jun Kwang-woo 25
Junior Note pricing model 104
jurisdictional barriers 117, 119
Kashkari, Neel 22
Kelly, Martin 91, 92, 94
Keynes, John Maynard 206
Kohn, Donald 54, 56
Korea Central Mortgage 15
Korean Development Bank 25
Korean Development Fund (KDF) 41
Korean Investment Corporation (KIC) 41
Kotz, David 30
Koutouvides, Aristide 135
Kuhn Loeb 1
Kumar, Alok 214
Lacker, Mr 68
Large Loan pricing model 104
Laux, Christian 145
LBO 108, 112
Lee, Charles M 214
Lehman, Henry 1
Lehman, Meyer 1
Lehman, Robert 2
Lehman Bankhaus AG 21
Lehman Brothers Holding Incorporated (LBHI) 1, 42, 89, 115, 117, 122, 124, 128
Lehman Brothers Inc. (LBI) 116, 117, 125
Lehman Brothers International Europe (LBIE) 51, 93, 94, 114
Lehman Brothers Special Financing (LBSF) 122, 125, 128
Leux, Christian 145
Lewis, Ken 43, 44, 45, 46, 47, 62
Li, Ada 124
Li, David X 167
LIBOR 125, 174
limited company, Lehman Brothers becomes 4
Lincoln Capital Fixed Income 8
Linklaters 93
liquidity
in 2008 16, 19, 25, 41, 44, 50, 55
and Bear Stearns 34, 36
and consolidated supervision 28
and the destruction of value 116
and Lehman's risk management 154, 190
liquidity crisis 16, 36
liquidity stress period 21, 36
temporary liquidity 117
and trust 220
‘living wills’ 128, 130
Lo, Andrew 208
loan losses provision 145
Lomas, Tony 114
Lombard St (Bagehot, 1873) 218
London Stock Exchange 114
Lowitt, Ian 20, 25, 89, 97, 100, 112
LTCM (Long Term Capital Management) 5, 43, 62
Lubke, Theo 124
MacKenzie, Donald 168
Maiden Lane LLC 17, 62
market efficiency assumption 203
market-based yield 106, 139
markets, definition of 215
Markit 171
mark-to-credit 138
mark-to-market accounting
and commercial real estate 26, 42
and consolidated supervision 86
and the efficient market hypothesis 203, 215
and Lehman bankruptcy 65
and Lehman's asset valuation 97, 98, 99, 100, 106, 144
as valuation methodology 138
mark-to-yield 138
Marsal, Bryan 113
Master Agreements (ISMA) 120
Masters, Blythe 168
McCarthy, Callum 48, 49
McConnell, Meg 57
McDade, Bart 20, 94, 100
McGee, Hugh ‘Skip’ 6
Merrill Lynch
asset valuation 146
as bank holding company 27
board 192
and bridge equity 108
and consolidated supervision 47
credit ratings 20
and the Gramm-Leach-Bliley Act 81
and Lehman 6, 7, 9, 10, 46
leverage ratios 38
losses on CDOs 170
and the OTC derivatives market 125
rescue of 39, 46, 47, 65
Metavante 125
MetLife 102
Miller, Harvey 64, 115, 126
Min Euoo-Sung 42
money market mutual funds (MMMFs) 58
money markets 69, 72, 119
monolines 56
Monte Carlo approach 169
Moody's 6, 9, 20, 42, 55, 66, 177
moral hazard 59, 63, 64, 65, 69
Morgan Stanley
in 2008 64
as bank holding company 27, 120
board 192
and bridge equity 108
and consolidated supervision 31
credit ratings 20
and Federal Reserve corporate governance guidance 198
and Lehman 7
leverage ratios 38
and the OTC derivatives market 125
and the PDCF 24
mortgage origination business 5, 10, 11, 31, 33, 58, 105
mortgage-backed securities (MBS), see also subprime loans
in 2000s 57, 81
in 2008 46
and CDOs 166
and CDSs 173, 176
classified as Level 2 or 3 assets 147
and the Glass-Steagall Act 75
and historical records 170
and investment banking 77
Lehman's 10, 26, 97, 102, 145
and liquidity risk 37
and loss of trust 218
valuation of Lehman's 99
Mosser, Patricia 63
NASDAQ 179, 183, 193
National Association of Corporate Directors 194, 200
Nazareth, Annette 27, 32, 82, 85
net asset value (NAV) triggers 66
net capital rule 30, 32, 49, 81, 83
net leverage ratios 92, 94
Neuberger Berman 7, 26, 41
New York Federal Reserve Bank 16, 21, 44, 48, 51, 54, 63, 66, 115, 175
New York Stock Exchange (NYSE) listing rules 182, 191, 192
nightly cash sweep 114
Nomura 125
non-bank financial institutions 75, 109
North American Capital Markets 116
Novation Protocol (2005) 175
novations 124
Odrich, Michael 8
Office of Compliance Inspections and Examinations (SEC) 32
Office of the Comptroller of the Currency (OCC) 76, 108, 131, 164, 194, 199
Office of Thrift Supervision (OTS) 133, 154, 165
O'Meara, Christopher 89, 150, 155
opinion letters 93
Orderly Resolution Authority (OLA) 128
orderly vs. distressed transactions 147
organizational structure, see also corporate governance
chart 228
complexity leading to settlement delays 126, 128
‘too big/ complex to manage’ 13, 130
Ospraie 10
OTC (over-the-counter) derivatives 29, 55, 56, 59, 113, 118, 219
other-than-temporary impairments (OTTI) 148
Panic of 2007, The (Gorton) 218
Park, Eugene 178
Parkinson, Pat 55, 59
Parsons, Richard 80
Paulson, Henry
on the confidence crisis 218
and Fannie Mae/Freddie Mac 68
and Fuld 42
lack of understanding of effects 65, 72, 120, 131
and Lehman failure 43, 45, 56, 59, 61, 62
on moral hazard 64
no authority to bail out Lehman 17, 43
Paulson, John 170
PCG (Product Control Group) 97, 100, 103, 104, 166
PDCF (Primary Dealer Credit Facility) 20, 21, 48, 51, 53, 56, 67
Peck, James 53
personal liability (of board) 184, 191
Peterson, Peter 2, 3
Poole, William 65
Posner, Richard 206
President of the United States 61, 192
‘price flex’ 110
price verification process 164
prices vs. value 221
Primerica 4
private equity franchise 8
private placement 2
Proctor, Rita 66
product controllers 100
proprietary trading 80
proxy signs 218
Prudential Regulatory Authority 131
psychology and behavioural finance 213
PTG (Principal Transactions Group) 100, 103, 104, 134, 138, 163
‘put backs’ 33
PwC 114, 115
QFCs (qualified financial contracts) 121
quants (quantitative analysts) 166, 168
raptor entities 180
rating agencies 20, 81, 94, 95, 156, 169, 172
Moody's 6, 9, 20, 42, 55, 66, 177
S&P (Standard and Poor) 20, 55, 169, 177
rational markets assumption 203
RBS (Royal Bank of Scotland) 125
real estate, see also commercial real estate
asset valuation 46, 99, 133, 159
excluded from stress testing 152
guidelines on valuation 135
internal rates of return (IRR) 104
and Lehman bankruptcy 63, 89, 90, 97
Lehman Brothers move into 5
Principal Transactions Group (PTG) 102
regulatory gap in asset valuation 133
recession 67, 71, 209
regulation, see also specific regulatory bodies
concerns over risk 154
CSE (Consolidated Supervised Entities) 27, 55, 58, 82, 153, 164
failure of the CSE programme 27
‘Final Guidance on Concentrations in Commercial Real Estate Handling’ 108
‘functional regulation’ principle 77
and the Gramm-Leach-Bliley Act 77
post-Lehman changes 130
and the ratings agencies 170
real estate asset valuation regulations 135
regulatory gap in asset valuation 133
re-hypothecation 119
REI Global (Real Estate Investments Global) 26, 41, 42, 48
Reilly, Gerard 105
replacement cost methodology 125, 127
Repo 105 89, 90, 156
Repo 108 90
repo agreements 30, 55, 56, 57, 59, 90, 145
reporting systems and corporate governance 184, 186, 191, 197, 199
Reserve Primary Fund 70, 71, 119
residual method 161
Risk Committee 152
risk management
and CDOs 171
and CDSs 175
and commercial real estate 136
and consolidated supervision 33, 39, 55, 82
and the efficient market hypothesis 205, 208, 209
Fuld on 15
Lehman's risk appetite 151, 156, 190
Lehman's risk management in practice 153, 179, 189, 195
Lehman's risk management process 149
post-Lehman changes to regulation 131, 193
and the PTG 104
and valuations 134
Rosengren, President 68, 69
Royal Institution of Chartered Surveyors 160
Russo, Tom 45, 65
Rutledge, Bill 49
S&P (Standard and Poor) 20, 55, 169, 177
salaries 5
Salomon Smith Barney 73
Samuelson, Paul 206, 211
Santander 55
Sants, Hector 48, 49
Sarbanes-Oxley Act (2002) 32, 179, 191
Sarkar, Asani 128
scenario analysis 33, 49
Schneider, Martin 176
Schussler, Michael 62
SEC (Securities and Exchange Commission)
and the business judgement rule 186
Consolidated Supervised Entities (CSE) programme 27, 82
and corporate governance 179, 184
and the EESA 144
and the Gramm-Leach-Bliley Act 78, 82
and Lehman bankruptcy 45, 53, 54, 58
and Lehman's risk appetite 151
and Lehman's risk management 152, 155, 156, 190
and mark-to-market accounting 144
new corporate governance rules (2010) 193
regulation of development valuations 164
regulatory gap in asset valuation 133
and Repo 105 95
and the Sarbanes-Oxley Act (2002) 180, 183
Securities Act (1933) 179
Securities and Exchange Act (1934) 81
Securities Exchange Act (1934) 179
Securities Investor Protection Corporation 81
security underwriting 6, 9, 74, 76, 78, 81
Senate Banking Committee 61
senior management (Lehman's) 186, 190, see also specific individuals
Sewell, Martin 208
SFAS 157 (statement of financial accounting standards) 96, 134, 142
Shafran, Stephen 56, 59
Shapiro, Mary 35, 95
share prices (Lehman Brothers') 12, 15, 17, 19, 25, 26, 42, 66, 114
shareholder approval 47, 49, 50, 60
Shearson 4
Shearson Lehman Hutton 4
Shiller, Robert 208, 210, 211
short-term secured finance 36, 131, 146
Shu, Sihan 170
‘side letters’ 110
SIFIs (systemically important financial institutions) 130
single transaction limit 152, 155, 189
Sirri, Erik 27, 28, 55
Skeel, D 123
Societe Generale 125
Soros, George 206
‘source of strength’ doctrine 85
Southern railroad 1
Spears, Taylor 168
special trading session 119
SpinCo 41
spreadsheet modelling 100
SPVs (special purpose vehicles) 58, 167
State Street Corporation 198
Sternlicht, Barry 5
Stewart, James 44
Stiglitz, Joseph 206
stress tests 151, 155, 189, 190
structured instruments, valuation of 99
subprime loans
in 2008 15
acquisition of Finance America LLC 9
and Bear Stearns 29, 31
and CDOs 166, 171
and CDSs 176
and Citibank 21
and the destruction of value (derivatives) 129
developments in 2005 10
and the efficient market hypothesis 210
and the Gramm-Leach-Bliley Act 81
in Lehman Brothers' portfolio (2008) 26
and Lehman's aggressive growth strategy 149
and Lehman's asset valuation 98
and loss of trust 218
and the ‘panic of 2007’ 57
Paulson on 65
and Repo 105 92
as root cause 66
and the SEC 32, 33, 38
underwriting 9
subsidiary companies (Lehman's) and bankruptcy 113, 116, 126, 128, 131, 228
Summe, Kimberley 122, 124, 128
SunCal 26, 100, 107, 133, 140, 160
Supervisory and Regulatory Letter (Federal Reserve 2000) 78
supervisory oversight of FHCs, see regulation
Supervisory Review Process (Basel Second Pillar) 33
Swagel, Phillip 22
Swedburg, Richard 218, 220
‘tail risk’ 152
Tanona, Bill 98
TARP (Troubled Asset Relief Plan) 70, 178
Tarullo, Governor 80
Taylor, Charles 132
teamworking 5, 6
temporary impairments 148
Thai-Larsen, P 192
Thain, John 46, 47
third quarter results (2008) 25
thrifts 27
TIPS (Treasury Inflation Protected Securities) 93
Tishman Speyer 46, 102, 108, 109, 112, 141
Trade Information Warehouse 126
transparency 98, 144, 147, 220
Travelers Group 73
Treasury
after Lehman collapse 70
role in collapse 53, 54, 55
understanding of global implications 66, 113
TriMont 104, 134, 135, 139, 140, 160, 163
tri-party repo agreements 30, 55, 56, 57, 59, 69, 147
trust 146, 217, see also confidence crisis
TSLF (Term Securities Lending Facility) 17, 20, 53, 56
Turner Review 203
Tyco 180
UBS 24, 125, 171
UK (United Kingdom)
bankruptcy laws 121
and Barclays potential buyout of Lehman 48
‘bed and breakfasting’ 91
and CDSs 175
concerns over the banking sector 80
corporate governance requirements 192, 199
‘fit and proper’ test 192
Lehman goes bankrupt in 51
opinion letter provided by Linklaters 93
Prudential Regulatory Authority 131
regulation 78, 154
UK assets in Lehman portfolio 26
valuation standards 160
underwriting 38, 39, 165
USPAP (Uniform Standards of Professional Appraisal Practices) 138, 140, 160
utility 221
value destruction 113
value measurement 159
value-at-risk models see VaR model
Valukas, Anton 89, 94, 99, 101, 150, 151, 154, 155, 159, 184, see also Examiner's report
VaR model 33, 34, 56, 84, 151, 154
Varley, John 44, 45, 48, 49, 50
Vayanos, Dimitri 216
Voigt, Jan 22
Volcker rule 75, 80, 131
Wachovia 108
Walker, David 201
Walsh, Mark A 5, 100, 101, 107, 109, 110
Warsh, Mr 61, 69
Washington Mutual 65
Watkins, Sharron 182
wealth management unit 5
Weber, Mark 155
Wellink, Nout 36
Wells Fargo 194, 198
Wespac 55
whistleblowing 182
Whitacre, Ed 6
Wilkinson, Jim 62
Williams Cos 6
Willumstead, Robert 47
Woolley, Paul 216
Woolworth Building 5
Worldcom 180
Worley, David 141
write-downs
in 2008 18, 19
and Archstone 111, 112
and CDS settlement 174
and consolidated supervision 34, 35
and Lehman bankruptcy 98, 100, 102, 103, 104, 106
and mark-to-market accounting 144, 146
and MBSs 58
and the PTG 140
and subprime lending 39
Yellen, Mrs 67, 89, 95
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Lehman Brothers

A Crisis of Value

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