17 Jul 2022


The Fall of Lehman Brothers

Format: APA

Academic level: College

Paper type: Coursework

Words: 303

Pages: 1

Downloads: 0

Lehman Brothers were one of the largest financial institutions in the United States. The company began experiencing problems when it started offering mortgage loans to clients. Before the onset of the worldwide economic crisis, banks made significant profits from mortgages (Cochrane, 2009). Therefore, Lehman Brothers developed mortgage-backed securities (MBS) and sold them to investors globally. These MBS comprised debts. As long as people paid mortgages, investors made profits. The Lehman Brothers took many risks to the extent that the investment bank became insolvent. The Lehman Brothers did not uphold their fiduciary responsibility. 

The trust of the general public and investors globally was lost due to the bank’s unethical practices. It was not honest in revealing information about its practices related to finances. The Lehman Brothers kept assuring people that the bank was doing well financially when it was already collapsing. The company had gone to the extent of proposing increased financial leverage to grow profits (Wiggins et al., 2014). This was further complicated by the bonuses, which made employees unethical and dishonest in disclosing the firm's solvency. Besides, the management failed to implement action to stop the corrupt practices. 

It’s time to jumpstart your paper!

Delegate your assignment to our experts and they will do the rest.

Get custom essay

According to fiduciary duty ethics, an entity or party has a legal duty to act in the best interests of the other party(s) (Fieser, 2015). The term fiduciary refers to trust. Therefore an individual with fiduciary responsibility is mandated to retain trust. In the Lehman Brothers case, the firm did not conduct itself in the best interests of the investors, the public, and other stakeholders. The firm and its employees were after fulfilling their interests, and that is why they were dishonest. They did not act in good faith, as seen in their action to conceal that the company was insolvent. The utilitarian theory also supports this perspective. According to utilitarianism, the individuals or entities should engage in actions that enhance happiness for the majority. Unfortunately, the actions of Lehman Brothers caused harm to the majority. 


Cochrane, J. H. (2009). Lessons from the financial crisis. Regulations. 32(4), 34-37. Retrieved from http://object.cato.org/sites/cato.org/files/serials/files/regulation/2009/11/v32n46.pdf 

Fieser, J. (2015). Introduction to business ethics [Electronic version]. Retrieved from https://content.uagc.edu/ 

Wiggins, R. Z., Piontek, T., & Metrick, A. (2014). The Lehman Brothers bankruptcy: Overview. Yale School of Management YPFS Cases. Retrieved from http://som.yale.edu/sites/default/files/files/001-2014-3A-V1-LehmanBrothers-A REVA.pdf 

Cite this page

Select style:


StudyBounty. (2023, September 17). The Fall of Lehman Brothers.


Related essays

We post free essay examples for college on a regular basis. Stay in the know!

17 Sep 2023

The Relationship Between Compensation and Employee Satisfaction

In line with the United States Occupational Safety and Health Administration (OSHA), work-related illness or injury derive from incidents or contact with the workplace hazards ( Singhvi, Dhage & Sharma, 2018). As far...

Words: 363

Pages: 1

Views: 96

17 Sep 2023

The Tylenol Murders: What Happened in Chicago in 1982

The Chicago Tylenol Murders of 1982 were tragedies that occurred in a metropolitan region of Chicago and involved an alarming amount of recorded deaths. It was suspected to that the deaths were caused by drug...

Words: 557

Pages: 2

Views: 129

17 Sep 2023

Ethical and Legal Analysis: What You Need to Know

Part 1 School Counselors (ASCA) | Teachers (NEA) | School Nurses (NASN) |---|--- The ASCA is responsible for protecting students’ information from the public. They always keep them confidential,...

Words: 531

Pages: 2

Views: 89

17 Sep 2023

Naomi Klein: The Battle for Paradise

Corporate Social Responsibility (CSR) refers to self-driven motives by an organization or a state government to ensure the well-being of its people is safeguarded. Corporate Social Responsibility creates a strong...

Words: 1369

Pages: 6

Views: 392

17 Sep 2023

What is Utilitarianism?

It is a normative theory that defines the morality of an action on whether it is right or wrong, based on the result (Mulgan, 2014) . This theory has three principles that serve as the motto for utilitarianism. One...

Words: 833

Pages: 3

Views: 154

17 Sep 2023

Argument Mapping: Traffic Fatality

The first part of the paper critically analyzes the claim that "The US should return to the 55-mph speed limit to save lives and conserve fuel." According to Lord and Washington (2018), one of the verified methods of...

Words: 1111

Pages: 4

Views: 91


Running out of time?

Entrust your assignment to proficient writers and receive TOP-quality paper before the deadline is over.