Lehman Brothers declared bankruptcy in 2008 due to a total debt burden of $619 billion with remaining assets of $639 billion. The main reason for their significant amount of debt was subprime mortgage lending between the years of 2003 and 2007.Know More
During the housing bubble of 2003 and 2004, Lehman Brothers acquired five mortgage lenders, including two subprime mortgage specialists, Aurora Loan Services and BNC Mortgage. These lenders had many loans out to borrowers who didn't have full documentation of their financial status.
While these subprime loan companies were initially profitable, more and more borrowers defaulted on their loans. By 2007 there were serious concerns in financial markets about the profitability of companies that were carrying many defaulted subprime loans, yet Lehman Brothers underwrote more mortgage-backed securities than any other firm that year. This situation came to a head in August 2007, when two Bear Stearns hedge funds defaulted and caused panic in the marketplace. There was a temporary rebound in late 2007, but when Bear Stearns nearly collapsed in early 2008 due to subprime mortgages there was widespread belief that Lehman Brothers would be the next to fail. Lehman Brothers began announcing losses in June of 2008, and by September their stock was dropping sharply in value. By mid-September Lehman Brothers had only $1 billion in cash and declared bankruptcy.Learn more about Banks
Depending on the state of residency, a collection agency may have the right to freeze a bank account and take assets from that account per a court order according to the Consumer Financial Protection Agency. The court's judgment will state the amount of money owed, and there will be a determination made on how much of the funds will be taken.Full Answer >
OneWest Bank began business operations in March 2009, capitalized by IMB HoldCo LLC with assets from IndyMac Federal Bank FSB, which IMB acquired from the Federal Deposit Insurance Corporation, or FDIC. The FDIC became the Conservator of the IndyMac Federal Bank after the bank was closed by the Office of Thrift Supervision. All deposits with the IndyMac Federal Bank was transferred to OneWest, according to the FDIC website.Full Answer >
The Home Owners’ Loan Corporation, or HOLC, was established as an interim mortgage bailout program during the New Deal initiatives of the Great Depression, so the company eventually liquidated its assets as the economy stabilized. By the mid-1940s, the company was under pressure to sell its mortgage holdings back to private lenders, and by 1951, all mortgages were either paid off, sold or foreclosed.Full Answer >
The main function of a bank's treasury is to control and manage the bank's money as well as to make sure that capital and liquid assets are available to all parts of the bank. The treasury also liaises with the bank's regulating bodies. The regulators set the rules about capital and liquidity that banks must adhere to.Full Answer >