The Last Days of Lehman Brothers

Last updated

The Last Days of Lehman Brothers
The Last Days of Lehman Brothers - Fuld and Paulson.jpg
Johnson and Cromwell as Fuld and Paulson
Genre Drama
Written by Craig Warner
Directed byMichael Samuels
Starring James Cromwell
Ben Daniels
Corey Johnson
Michael Landes
James Bolam
Music by Kevin Sargent
Country of originUnited Kingdom
No. of episodes1
Production
Executive producer Ruth Caleb
ProducerLisa Osborne
Running time60 minutes
Production company BBC
Original release
Network BBC Two, BBC HD
Release9 September 2009 (2009-09-09)

The Last Days of Lehman Brothers is a British television film, first broadcast on BBC Two and BBC HD on Wednesday 9 September 2009. Filmed in London, it was written by Craig Warner and directed by Michael Samuels. It was shown as part of the BBC's "Aftershock" season, a selection of programmes marking the first anniversary of the collapse of the American investment bank Lehman Brothers. It featured James Cromwell, Ben Daniels, Corey Johnson, Michael Landes and James Bolam.

Contents

Synopsis

The Last Days of Lehman Brothers summarizes the events that occurred over the weekend preceding Monday, 15 September 2008, when Lehman declared bankruptcy. Some of the story is narrated by the fictional character "Zach", a Lehman employee often taking orders directly from Dick Fuld. Zach often breaks the Fourth wall, talking directly to the viewer.

Investment bank Lehman Brothers is in trouble after a turbulent six months in which their real estate investments have lost billions of dollars, causing steep drops in Lehman's stock. Lehman's boss, Dick Fuld (Corey Johnson), who brought the firm through other crises, is himself growing desperate. Fuld's plan to spin off the company's bad assets into a separate company does not satisfy investors, and Lehman stock drops by 75% in one week. Fuld's only remaining solution is to have Lehman acquired. Both Bank of America and Barclays are interested in purchasing the firm but are dissuaded because so much of Lehman's assets are "toxic" (worthless).

Lehman's problems have put the US government in a delicate position. The collapse of a firm of Lehman's size would have catastrophic economic repercussions well beyond the firm itself. Because there is no political support for a government bailout of the firm, the government turns to Lehman's competitors for help. Late on the afternoon of 12 September, a Friday, the leaders of the top investment banks on Wall Street, Lehman's competitors, are summoned to the Federal Reserve Bank of New York. Treasury Secretary Hank Paulson warns the incredulous group that Lehman is not too big to fail and that there will be no bailout using public money. Instead, Paulson cajoles the bank heads to work out a joint plan among themselves to relieve Lehman of its toxic assets, warning them that the steep price they would pay to save Lehman would be easily outweighed by the cost of its failure. He also intimidates the bank heads by reminding them that they too will soon need help. A solution must be found before trading opens in Japan on Monday morning.

By Friday evening, Bank of America begins stalling the deal, noting that Lehman's valuation puts them "underwater" by billions of dollars. Fuld must now depend on Barclays, and he is clearly growing more desperate. Retaining hopes that Bank of America will change its mind, Fuld secretly orders the firm's attorney Harvey R. Miller (Richard Durden) to begin drafting a bankruptcy petition. Miller is incredulous, telling Fuld that a Lehman bankruptcy would be an unprecedented catastrophe, akin to the United States government going bankrupt.

As Paulson's group searches for alternatives, Lehman's assets are subject to "valuation" by analysts from other firms. The analysts spend the night poring over boxes of paperwork. Calculation is made extremely difficult because much of the assets are based on collateralized debt obligation (CDO) instruments whose value is difficult to assess, though it is clear that Lehman put a higher value on certain CDOs than other firms.

Overseeing the valuation, Zach mentions how the trafficking of subprime mortgages caused the economic crisis. The narration then shifts to Ezzy, Zach's sister back in Tennessee. Ezzy describes how she got her house by getting a mortgage from a broker who did not exhaustively check her financial documents, and altered her paychecks. Her mortgage was then sent to New York where other bankers packaged her mortgage along with others, turning it into a security that could be bought and sold. Successive bankers repackage and grade the securities, and actively trade them at enormous profit, but devote little attention to whether the homeowners themselves can pay their mortgages. Eventually the financial world is forced to acknowledge that their CDOs are based largely on mortgages like Ezzy's, causing their value to collapse.

Discussion continues at the Fed throughout Saturday with little result. John Thain of Merrill Lynch (Ben Daniels) pulls out of Paulson's bailout group, telling Paulson that his company is in discussions with Bank of America. As they are no longer committed to Lehman, Bank of America is free to consider acquiring Merrill Lynch, which desperately needs the deal. Since the prospect of acquisition makes it less likely that Merrill will need help from the Fed, Thain has little incentive to continue participating in Paulson's discussions. Paulson does not discourage Thain from leaving, seeing that an acquisition of Merrill Lynch could prevent another crisis that would also require some intervention by the Fed. As Thain leaves, he learns from Paulson of the Fed's plans to bail out AIG, whose credit default swaps insure half of the western world's banking system.

By Sunday morning, Fuld receives word that Barclays has agreed to acquire Lehman Brothers, saving it. Jubilation is short-lived. Under British law, Barclays cannot guarantee Lehman's debts until its own shareholders vote on the matter, and that will not happen until Tuesday – beyond the Monday morning deadline. Paulson reiterates that the Fed will not "back-stop" Lehman, not even for the two days it will take for Barclays's shareholders to vote. With no chance of a buyout, Lehman has no choice but to file for bankruptcy. Harvey Miller is summoned to the Fed to prepare the bankruptcy petition. Miller is reluctant, warning Paulson that Lehman's assets exceed $600 billion. Paulson is adamant, telling Miller that he had been trying for months to get Dick Fuld to have Lehman acquired, but that the price was never high enough. Lehman's CFO signs the petition just minutes before the midnight deadline. A devastated Fuld leaves his office as Lehman's now unemployed staff clean out their desks.

In a voice-over, Zach notes that the Fed did bail out firms that faced collapse after Lehman.

Cast

Production

The film followed previous BBC drama Freefall and was produced following a collaboration between the BBC's factual and drama departments. The production is a work of fiction based on the real events that took place; the story was put together after watching interviews and with off-the-record chats with well-placed sources. [1] It was completed in a short time frame; five weeks for scriptwriting, two for filming and five for editing. [1] It was written by Craig Warner (writer of Maxwell and The Queen's Sister ), directed by Michael Samuels (Caught in a Trap, The Curse of Steptoe ) and produced by Lisa Osborne ( Little Dorrit ).

Warner told ABCNews.com that he tried to make the film "fun and comprehensible" because "a bunch of white guys sitting around in suits talking about money isn't very interesting." The fictional character of Zach (played by Michael Landes) was introduced as Fuld's aide, and Landes says that the voiceover he gives "brings an element of humor". [2]

Osborne said that the production was about much more than just finance:

It was a disaster movie, it was Apollo 13 with the titans of Wall Street racing the clock to save the stricken bank; it was a Greek tragedy with Lehman's chief executive brought down by his own tragic flaw; it was Twelve Angry Men with solutions sought in smoke-filled rooms. [3]

Due to the low budget, locations in London were sought instead of those in New York. [3] Locations included Addington Palace near Croydon which acted as the Federal Reserve, and a disused office in London's Canary Wharf which served as Fuld's New York office. Coincidentally, the office had previously been used by Lehman Brothers and desks originally used by the company were used to dress the set. [1] [3]

Reception

Overnight figures indicated that the production gained 1 million viewers, a 5% audience share, behind England's 2010 FIFA World Cup qualifier on ITV1, Motorway Cops on BBC One and Ramsay's Kitchen Nightmares USA on Channel 4. [4]

Robert Epstein of The Independent on Sunday said it was "all very fast-moving" and that "ultimately, it was hard not to be bored by what was one of the most important – and dramatic – events of the past year. The end of Lehman – and the programme – couldn't come soon enough." [5] The Guardian 's Sam Wollaston didn't think his boredom was entirely his fault, saying he found it "unengaging" and "a mess". [6] Tim Teeman of The Times said that "some vivid performances transcended the baffling material" [7] and John Preston of The Daily Telegraph said:

If I hadn’t read beforehand about how Last Days had been written and shot in a tremendous hurry, I think I might have guessed. The tone wobbled awkwardly at times, as did the focus. However, its faults were always faults of ambition, not timidity. Craig Warner's script consistently aimed high, with his boardroom exchanges being especially good: the chippy competitiveness and testosterone surges slowly subsiding into stunned disbelief. [8]

Rachel Cooke in the New Statesman also said that Warner "tried his best" but that it was "dull and confusing in spite of a cast that included the superb James Cromwell". She also said that documentary The Love of Money about the Lehman Brothers collapse "wiped the floor" with The Last Days of Lehman Brothers, [9] but Adam Sweeting said, comparing the drama and the documentary, that the latter "gives you a lot more numbers and facts, but rather less human insight." [10]

See also

Related Research Articles

<span class="mw-page-title-main">Lehman Brothers</span> Defunct American financial services firm

Lehman Brothers Inc. was an American global financial services firm founded in 1850. Before filing for bankruptcy in 2008, Lehman was the fourth-largest investment bank in the United States, with about 25,000 employees worldwide. It was doing business in investment banking, equity, fixed-income and derivatives sales and trading, research, investment management, private equity, and private banking. Lehman was operational for 158 years from its founding in 1850 until 2008.

<span class="mw-page-title-main">Bear Stearns</span> American investment bank

The Bear Stearns Companies, Inc. was an American investment bank, securities trading, and brokerage firm that failed in 2008 as part of the global financial crisis and recession. After its closure it was subsequently sold to JPMorgan Chase. The company's main business areas before its failure were capital markets, investment banking, wealth management, and global clearing services, and it was heavily involved in the subprime mortgage crisis.

<span class="mw-page-title-main">Richard S. Fuld Jr.</span> American banker

Richard Severin Fuld Jr. is an American banker best known as the final chairman and chief executive officer of investment bank Lehman Brothers. Fuld held this position from 1 April 1994 after the firm's spinoff from American Express until 15 September 2008. Lehman Brothers filed for bankruptcy protection under Chapter 11 on September 15, 2008, and subsequently announced the sale of major operations to parties including Barclays Bank and Nomura Securities.

<span class="mw-page-title-main">Merrill Lynch & Co.</span> Defunct American investment bank

Merrill Lynch & Co., formally Merrill Lynch, Pierce, Fenner & Smith Incorporated, was a publicly-traded American investment bank that existed independently from 1914 until January 2009 before being acquired by Bank of America and rolled into BofA Securities.

<span class="mw-page-title-main">Stanley O'Neal</span> American business executive

Earnest Stanley O'Neal is an American business executive who was formerly chairman and chief executive of Merrill Lynch having served in numerous senior management positions at the company prior to this appointment. O'Neal was criticized for his performance during his tenure as chief executive at Merrill Lynch, where he oversaw the deterioration of the firm's stability and capital position, which resulted in his ouster in September 2007, and the firm's eventual fire sale to Bank of America one year later. Prior to his tenure as chairman and CEO, Merrill Lynch had thrived as a stand-alone company since 1914.

<span class="mw-page-title-main">Asset-backed securities index</span>

An asset-backed securities index is a curated list of asset-backed security exposures that is used for performance bench-marking or trading.

The subprime mortgage crisis impact timeline lists dates relevant to the creation of a United States housing bubble and the 2005 housing bubble burst and the subprime mortgage crisis which developed during 2007 and 2008. It includes United States enactment of government laws and regulations, as well as public and private actions which affected the housing industry and related banking and investment activity. It also notes details of important incidents in the United States, such as bankruptcies and takeovers, and information and statistics about relevant trends. For more information on reverberations of this crisis throughout the global financial system see 2007–2008 financial crisis.

This article provides background information regarding the subprime mortgage crisis. It discusses subprime lending, foreclosures, risk types, and mechanisms through which various entities involved were affected by the crisis.

<span class="mw-page-title-main">Bankruptcy of Lehman Brothers</span> 2008 bankruptcy of American investment bank

The bankruptcy of Lehman Brothers, also known as the Crash of '08 on September 15, 2008, was the climax of the subprime mortgage crisis. After the financial services firm was notified of a pending credit downgrade due to its heavy position in subprime mortgages, the Federal Reserve summoned several banks to negotiate financing for its reorganization. These discussions failed, and Lehman filed a Chapter 11 petition that remains the largest bankruptcy filing in U.S. history, involving more than US$600 billion in assets.

The Emergency Economic Stabilization Act of 2008, also known as the "bank bailout of 2008" or the "Wall Street bailout", was a United States federal law enacted during the Great Recession, which created federal programs to "bail out" failing financial institutions and banks. The bill was proposed by Treasury Secretary Henry Paulson, passed by the 110th United States Congress, and was signed into law by President George W. Bush. It became law as part of Public Law 110-343 on October 3, 2008. It created the $700 billion Troubled Asset Relief Program (TARP), which utilized congressionally appropriated taxpayer funds to purchase toxic assets from failing banks. The funds were mostly redirected to inject capital into banks and other financial institutions while the Treasury continued to examine the usefulness of targeted asset purchases.

The government interventions during the subprime mortgage crisis were a response to the 2007–2009 subprime mortgage crisis and resulted in a variety of government bailouts that were implemented to stabilize the financial system during late 2007 and early 2008.

<span class="mw-page-title-main">Timothy Geithner</span> American central banker and politician

Timothy Franz Geithner is an American former central banker who served as the 75th United States Secretary of the Treasury under President Barack Obama from 2009 to 2013. He was the President of the Federal Reserve Bank of New York from 2003 to 2009, following service in the Clinton administration. Since March 2014, he has served as president and managing director of Warburg Pincus, a private equity firm headquartered in New York City.

<i>A Colossal Failure of Common Sense</i>

A Colossal Failure of Common Sense: The Inside Story of the Collapse of Lehman Brothers is a 2009 non-fiction book written by Lawrence G. McDonald and Patrick Robinson which chronicles the events surrounding the bankruptcy of Lehman Brothers in the context of the financial crisis of 2007–2010 and the subprime mortgage crisis. The work is divided into a prologue, an epilogue, and twelve chapters.

<span class="mw-page-title-main">Paulson & Co.</span> American investment management firm

Paulson & Co., Inc. is a family office based in New York City. Previously, it was a hedge fund established by John Paulson in 1994. Specializing in "global mergers, event arbitrage, and credit strategies", the firm had a relatively low profile on Wall Street until its hugely successful bet against the subprime mortgage market in 2007. At one time the company had offices in London and Dublin.

<i>Inside Job</i> (2010 film) 2010 documentary film by Charles Ferguson

Inside Job is a 2010 American documentary film, directed by Charles Ferguson, about the late-2000s financial crisis. Ferguson, who began researching in 2008, said the film is about "the systemic corruption of the United States by the financial services industry and the consequences of that systemic corruption", amongst them conflicts of interest of academic research, which led to improved disclosure standards by the American Economic Association. In five parts, the film explores how changes in the policy environment and banking practices helped create the financial crisis.

<i>Too Big to Fail</i> (film) 2011 TV biographical film on the 2008 financial crisis directed by Curtis Hanson

Too Big to Fail is a 2011 American biographical drama television film directed by Curtis Hanson and written by Peter Gould, based on Andrew Ross Sorkin's 2009 non-fiction book Too Big to Fail. The film aired on HBO on May 23, 2011. It received 11 nominations at the 63rd Primetime Emmy Awards; Paul Giamatti's portrayal of Ben Bernanke earned him the Screen Actors Guild Award for Outstanding Performance by a Male Actor in a Miniseries or Television Movie at the 18th Screen Actors Guild Awards.

<span class="mw-page-title-main">2007–2008 financial crisis</span> Worldwide economic crisis

The 2007–2008 financial crisis, or the global financial crisis (GFC), was the most severe worldwide economic crisis since the Great Depression. Predatory lending in the form of subprime mortgages targeting low-income homebuyers, excessive risk-taking by global financial institutions, a continuous buildup of toxic assets within banks, and the bursting of the United States housing bubble culminated in a "perfect storm", which led to the Great Recession.

Merrill, previously branded Merrill Lynch, is an American investment management and wealth management division of Bank of America. Along with BofA Securities, the investment banking arm, both firms engage in prime brokerage and broker-dealer activities. The firm is headquartered in New York City, and once occupied the entire 34 stories of 250 Vesey Street, part of the Brookfield Place complex in Manhattan. Merrill employs over 14,000 financial advisors and manages $2.8 trillion in client assets. The company also operates Merrill Edge, a division for investment and related services, including call center counsultancy.

<span class="mw-page-title-main">Alvarez and Marsal</span> Global professional services firm

Alvarez & Marsal Holdings, LLC(A&M) is a global professional services firm notable for its work in turnaround management and performance improvement of a number of large, high-profile businesses both in the US and abroad such as Lehman Brothers, HealthSouth, Tribune Company, Warnaco, Interstate Bakeries, Target, Darden Restaurants and Arthur Andersen.

<span class="mw-page-title-main">Goldman Sachs controversies</span>

Goldman Sachs, an investment bank, has been the subject of controversies. The company has been criticized for lack of ethical standards, working with dictatorial regimes, close relationships with the U.S. federal government via a "revolving door" of former employees, and driving up prices of commodities through futures speculation. It has also been criticized by its employees for 100-hour work weeks, high levels of employee dissatisfaction among first-year analysts, abusive treatment by superiors, a lack of mental health resources, and extremely high levels of stress in the workplace leading to physical discomfort.

References

  1. 1 2 3 Grant, Olly (26 August 2009). "The Last Days of Lehman Brothers: behind-the-scenes". The Independent . Retrieved 22 January 2010.
  2. Fisher, Luchina (9 September 2009). "Lehman Collapses Again on Small Screen". abcnews.com. ABC News . Retrieved 22 January 2010.
  3. 1 2 3 Osborne, Lisa (9 September 2009). "Making a drama out of Lehman Bros". BBC News Online . Retrieved 22 January 2010.
  4. Plunkett, John (10 September 2009). "TV ratings: Derren Brown's lottery stunt draws 3m viewers". The Guardian . Retrieved 5 February 2010.
  5. Epstein, Robert (13 September 2009). "Last Chance to See, BBC2 The Last Days of Lehman Brothers, BBC2 Harper's Island, BBC3" . The Independent on Sunday . Archived from the original on 18 June 2022. Retrieved 22 January 2010.
  6. Wollaston, Sam (10 September 2009). "Nigel Slater's Simple Suppers, Trawlermen and The Last Days of Lehman Brothers". The Guardian . Retrieved 22 January 2010.
  7. Teeman, Tim (10 September 2009). "The Last Days of Lehman Brothers; Jonathan Meades: Off Kilter". The Times . Retrieved 22 January 2010.
  8. Preston, John (11 September 2009). "The Last Days of Lehman Brothers: review". The Daily Telegraph . Retrieved 22 January 2010.
  9. Cooke, Rachel (10 September 2009). "The Last Days of Lehman Brothers". New Statesman . Retrieved 22 January 2010.
  10. Adam Sweeting (10 September 2009). "The Last Days of Lehman Brothers, BBC2". The Arts Desk. Retrieved 22 January 2010.