Crisis Anniversary

Lehman is long-term champion in Wall Street hubris

12 Sep 2018

Take a firm with leaders seasoned from previous crises. Add a bubble in an asset they considered their specialty. Let them ignore their own risk rules and throw in supine watchdogs. How Dick Fuld crashed Lehman should scare sense into generations of bankers and overseers.

Firefighters of last crisis see smoldering danger

12 Sep 2018

Former U.S. officials Ben Bernanke, Tim Geithner and Hank Paulson agree it’s hard to predict the next financial calamity. Defenses, such as a robust economy and strong institutions, would help. But inequality and a diminished civil service will make it harder to soften the blow.

Spectre of the late 1930s haunts Ray Dalio

12 Sep 2018

The Bridgewater founder made positive returns in 2008 when few other asset managers did. Today, he tells Breakingviews, he worries about the U.S. deficit and debt pressures that could soon go critical. The risk of populism and conflict sounds eerily like the pre-war years.

Chancellor: The legacy of ultralow interest rates

10 Sep 2018

This first in a series of "Ten Years After" essays argues the bold monetary experiment that followed Lehman’s demise unleashed speculative manias, carry trades, populism born of inequality, capital misallocation and a China bubble that pose grave threats to the financial system.

Chancellor: Zombies are Lehman’s dangerous spawn

11 Sep 2018

Over the past decade, a close relationship exists between the rise in the number, and survival rate, of unproductive firms and the decline in interest rates. Easy money has allowed these zombies to roam freely, infecting the world’s economies.

Cox: Too-big-to-fail bias just now fading away

11 Sep 2018

For the first time since the financial crisis began, America’s 5,000 smaller banks are paying less to fund their businesses than mega-banks like JPMorgan and Citi. The shift, evident in the most recent quarterly FDIC data, suggests a leveling of the playing field 10 years on.

The Exchange: Frank on finance

10 Sep 2018

Barney Frank helped craft the post-crisis rules that put banks back on track. He talks with John Foley about how politics has made the system more fragile, why populism thrived on the right but fizzled on the left, and what it was like to be one of the few openly gay lawmakers.

Chancellor: The mother of all speculative bubbles

11 Sep 2018

Since the interest rate discounts future cash flows, the central banks’ policy of ultralow rates has had an outsized impact on investments whose income lies far out in the future, whether through tech firms or 100-year bonds, and on assets providing no income. Danger awaits.

Cox: Why we remember the 2008 financial crisis

6 Sep 2018

Over the coming weeks, Breakingviews will publish numerous columns and a podcast series with politicos, regulators and bankers involved in resolving the mess 10 years ago. The reason is simple: When people forget what went awry, they risk repeating the errors of the past.

Time breathes life into America’s mortgage zombies

5 Sep 2018

It’s 10 years since Washington took over Fannie Mae and Freddie Mac, injecting $187 bln to render them undead. Reforms have not touched the supposedly temporary fix. A functioning home-loan market, revenue for the Treasury and inertia suggest taxpayers may be stuck with them.

The Exchange: From slump to Trump

4 Sep 2018

In the first of our “Ten Years After” series, Peter Thal Larsen talks to Adam Tooze. The Columbia University history professor joins the dots from the 2008 crash to Brexit and U.S. elections, noting a declining faith in U.S. willingness to be the global lender of last resort.

Viewsroom: The financial crisis, 10 years on

30 Aug 2018

The crash cost the U.S. economy $30 trln, put 9 mln people out of work and as many families out of their homes. And it exposed how unprepared bankers, lawmakers and watchdogs were. Here we preview our podcast miniseries interviewing some of the movers and shakers of the time.

Review: Citigroup’s 2008 bailout won’t be its last

24 Aug 2018

That’s one conclusion to draw from “Borrowed Time,” a new book examining the troubled 200-year history of Citi. The $180 bln bank has suffered repeated failures of over-aggression and lack of foresight, while Uncle Sam’s wallet blocks meaningful reform, the authors argue.

Cox: When commemorating crises, think 20 not 10

15 Aug 2018

As the decennial anniversary of Lehman’s systemic collapse approaches, it’s worth recalling the one that preceded it. Russia’s 1998 default led to LTCM’s demise. Shockingly, that fiasco’s lessons went mostly unheeded until 2008. The key takeaway: there are always blind spots.

Summer lulls offer false sense of security

10 Aug 2018

That, at least, is the lesson of August 2008. A complacent Citi exec claimed the lender had more than enough capital, Merrill handed one banker a $40 mln guarantee, GM’s CEO was talking up its prospects - and the Fed was worried about inflation. The hubris didn’t last long.

Review: The complex causes of the financial crisis

3 Aug 2018

The upheaval that’s unfolded over the past decade had myriad origins. In “Crashed”, Adam Tooze brings a historian’s perspective to the crisis and its aftermath. His ambitious narrative links Wall Street turmoil to euro zone disorder, but is stumped by political ructions in 2016.

Rising U.S. non-bank mortgage risk recalls crisis

25 Jul 2018

As the likes of Citigroup have cut lending specialists have stepped in, but they lack bank-like capital cushions. Government-owned Ginnie Mae, guarantor of $2 trln in mortgage-backed paper, is exposed. It’s a reminder that swaths of the home-loan market escaped post-2008 reform.

Review: The Lehman saga told by its Brothers

20 Jul 2018

The Wall Street firm failed a decade ago. A dazzling new production of “The Lehman Trilogy” reminds us how it began 164 years earlier. The founding siblings and their offspring tell how immigration, financial innovation, and periodic crises set the stage for the final collapse.

Bear Stearns is useful lesson in healthy conflict

14 Mar 2018

The Wall Street firm’s effective demise 10 years ago, like that of Lehman Brothers, was a group effort by executives and watchdogs. Now, post-crisis rules may get softened and regulators talk of forging a “partnership” with banks. A bit of mutual suspicion would be smarter.

Cox: No, wait, this is the real crisis anniversary

24 Aug 2017

Anyone who witnessed the subprime debacle has a single event they identify as its origin or apex, from HSBC's losses to Lehman's bust. Like all bubbly delusions, understanding the collective failure to act pre-emptively requires an appraisal of the full arc of what transpired.