Ten years ago, the investment bank Lehman Brothers went bankrupt. The event came to symbolise the start of the global financial crisis. With more than $600 billion (€516bn) in assets, it remains the biggest company failure in US history. What was it like at the centre of the firestorm? We spoke to Xavier Rolet, a former executive at Lehman's French business, about that day in September 2008; and to the Secretary-General of the OECD, Angel Gurria, about how policymakers responded to the crisis.
Former Managing Director at Lehman Brothers France, Xavier Rolet, told FRANCE 24, "We simply couldn’t get anybody on the phone," at Lehman’s headquarters on the weekend when rumours were circulating that the bank was in trouble. "When Lehman filed for bankruptcy, essentially, we found out from the press."
In the months running up to Lehman’s collapse, Rolet said, "the message we were getting from New York is this is basically a cabal against us… the company is healthy, the company has strong assets, yes, we’ve made investments but we’re essentially in good shape."
"There’s no doubt that the way that decision [to let Lehman fail] was made sought to balance the interest of financial stability on the one hand, and on the other side the political pressure – the very understandable political pressure – not to offer the financial services industry a free put, had it mismanaged itself."
Rolet went on to become CEO of the London Stock Exchange, but says Lehman’s collapse was a steep learning curve for him. "Clearly it’s not an experience that I recommend… but I would say that living through a cross-border bankruptcy experience is obviously a prime lesson in the value of a good legal system, and value of governance principle, one that is worth any MBA."