Edition:
United Kingdom

THE FINANCIAL CRISIS: 10 YEARS LATER

The Wider Image: Rebuilding lives, 10 years after Lehman's fall

Rebuilding lives, 10 years after Lehman's fall

It is an image that became a symbol of the global financial crisis -- about 20 bankers, their backs turned to the window, attending an emergency meeting at the London office of Lehman Brothers as the firm slid towards collapse.

A combination picture shows before and after of inside of a home in...

How tech jobs helped Rust Belt become house-flipping hotspot

In the run-up to the 2008 financial crisis, millions of amateur investors kept adding fuel to the overheating U.S. housing market by betting on quick profits in hotspots like Las Vegas or Miami. A decade later, house-flipping is making a comeback, but this time in some Rust Belt cities the last boom passed by.

Breakingviews - The Exchange: Kevin Rudd

Australia's prime minister in 2008 told Breakingviews how his government decided to spend some 6 pct of GDP on tax breaks, infrastructure and cash payments to citizens. That helped the country heavily exposed to China, commodities, finance and housing avoid a recession – just.

Jain, Co-chief Executive of Deutsche Bank speaks during a shareholders...

Breakingviews - The Exchange: Anshu Jain

Deutsche Bank was credited with coming through the 2008 crisis in better shape than many of its rivals. Jain, who rose from running the German lender’s global markets business to eventually become CEO, stopped by Times Square to speak with Rob Cox about the state of finance.

Richmond Federal Reserve Bank President Lacker reacts during an interview...

Breakingviews - The Exchange: Jeff Lacker

The presidency of the Richmond Fed, whose territory included two top U.S. banks, offered a unique window on the financial crisis. Wachovia needed rescuing and BofA’s deal to buy Merrill Lynch nearly collapsed. Lacker reflects on what went down and where finance is headed.

File photo of people at Lehman Brothers headquarters in New York

Breakingviews - The Exchange: Neel Kashkari

Even before Lehman Brothers went belly-up, the U.S. Treasury was hatching a contingency plan. Kashkari was one of the architects of the Troubled Asset Relief Program, which plugged some $250 bln into banks. He joins Rob Cox from his current perch running the Minneapolis Fed.

Former FDIC director Sheila Bair testifies before a House Financial...

Breakingviews - The Exchange: Sheila Bair

The chair of U.S. bank regulator FDIC in 2008 recalls how competition and disagreements between watchdogs contributed to the crash. A decade later, despite leaving the industry, she still feels an obligation to warn of the dangers of rolling back some post-crisis reforms.

A Citi sign is seen at the Citigroup stall on the floor of the New York...

Breakingviews - The Exchange: Vikram Pandit

As the chief executive of Citigroup, Pandit engineered the bank’s rescue and recovery from the crisis ten years ago. He swung by Times Square to discuss lessons learned, the things that still worry him and where he’s placing his bets on the future of the financial industry. 

Customers queue to enter a branch of Northern Rock in Kingston, Surrey,...

Breakingviews - Banks were first to fall in decade of lost trust

Banks were the first institutions to fall in a decade of lost trust. The crisis that reached its climax with the failure of Lehman Brothers a decade ago swept away the notion that financial leaders could be relied upon to safely run their firms. Since then central bankers, politicians and the media have also faced growing public scepticism. The malaise shows no sign of lifting.

Former Director of the U.S. National Economic Council Gary Cohn speaks at a...

Breakingviews - The Exchange: A chat with Gary Cohn

President Trump’s first National Economic Council director and former Goldman Sachs No. 2 discusses the financial crisis and its aftermath with Gina Chon. He also gives his take on tax cuts and trade, and explains why JPMorgan boss Jamie Dimon would make a “phenomenal” president.

Waters listens to testimony on robo-signing and foreclosures at a hearing...

Breakingviews - The Exchange: Congresswoman Maxine Waters

The senior Democrat on the U.S. House Financial Services Committee recalls the lack of answers that lawmakers had in the wake of the 2008 financial crisis. The Exchange went to Congress to discuss that period and find out her priorities if she takes over the banking committee. 

A staffer poses with 2015 edition of the 100 renminbi notes at the Bank of...

Breakingviews - Chancellor: Lehman’s easy money extends to China

Interest rates in China may never have turned negative, as they did in neighbouring Japan. Yet China’s economy has also become distorted by the decade of easy money since the 2008 financial crisis. As in the West, low interest rates in China are responsible for inflating asset prices, misallocating capital, aggravating inequality and undermining financial stability.

Hurricane Florence is pictured on the doppler radar on board a HC-130J...

Breakingviews - Chancellor: The carry trade that followed Lehman

The official position of the Federal Reserve is that the subprime crisis of 2008 was largely a consequence of poor financial regulation. There’s an alternative view: That the Fed’s easy-money policy after 2002 created a desperate search for higher-yielding securities. It also encouraged banks to partake in what are known as carry trades, borrowing cheaply in dollars and lending at higher rates both at home and abroad. From this perspective, the catastrophe following Lehman Brothers’ collapse was simply a giant trade gone wrong. Even lower interest rates in the past decade have revived this lending frenzy.

Protestor carries sign during rally in financial district in San Francisco

Breakingviews - AIG’s lost decade is not yet behind it

Anyone who has held shares in American International Group since the end of 2007 is still nursing a 95 percent stock-price loss. That’s even worse than fellow crisis basket case Citigroup. The insurer is, arguably, finally emerging from a lost decade after receiving a controversial $182 billion U.S. government bailout in 2008. But investors remain wary.

Greg Fleming, president of Morgan Stanley Wealth and Investment Management,...

Breakingviews - The Exchange: Greg Fleming

On the day Lehman Brothers went belly-up, Merrill Lynch sold itself to Bank of America. As president of the “Thundering Herd,” Fleming was the architect of that transaction. In conversation with Rob Cox, he defends the deal, reminisces on the crisis and discusses his new venture.

Luxury boats are seen during the Monaco Yacht show, one of the most...

Breakingviews - Chancellor: “Haves” enriched most from Lehman bust

The Greek philosopher Aristotle attacked the charging of interest on grounds that lenders demanded more money in return than they supplied. This ancient prejudice against interest lingers in the French economist Thomas Piketty’s claim that inequality increases when the return on capital, a quantum which includes the rate of interest, is higher than that of economic growth. Yet the overwhelming evidence from the easy money that followed Lehman Brothers’ demise shows that inequality really takes off when interest rates are maintained at artificially low levels.

Sept. 15, 2008 file image of Lehman Brothers name moving across a news...

Breakingviews - Lehman is long-term champion in Wall Street hubris

Lehman Brothers should not have failed. No, that’s not a criticism of the U.S. government’s refusal to bail out the firm, thus condemning it to file for bankruptcy on Sept. 15 a decade ago. Instead, it’s a recognition of how Chief Executive Dick Fuld and his lieutenants had built a well-run investment bank – until they succumbed to hubris.

File photo of people at Lehman Brothers headquarters in New York

Breakingviews - Chancellor: Zombies are Lehman’s dangerous spawn

The economy is like a rubber ball. The harder it hits the ground, the faster it bounces back. That’s what normally happens. After the Lehman Brothers bankruptcy, Western economies experienced their deepest contraction since the 1930s. Yet their subsequent recovery was decidedly lacklustre. Soon after, the markets witnessed a startling rise in the number of zombie firms – marginal businesses that appear to feed and multiply on an unchanging diet of cheap capital.

A child tries to grab soap bubble on sunny autumn evening in Berlin

Breakingviews - Chancellor: The mother of all speculative bubbles

In 1776, English man of letters Horace Walpole observed a “rage of building everywhere”. At the time, the yield on English government bonds, known as Consols, had fallen sharply and mortgages could be had at 3.5 percent. In the “Wealth of Nations”, published that year, Adam Smith observed that the recent decline in interest had pushed up land prices: “When interest was at ten percent, land was commonly sold for ten or twelve years’ purchase. As the interest rate sunk to six, five and four percent, the purchase of land rose to twenty, five-and-twenty, and thirty years’ purchase.” [i.e. the yield on land fell from 10 percent to 3.3 percent].

A Chase bank is seen in New York's financial district

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

The biggest question left unanswered since the great financial crisis erupted 10 years ago is the following: Are some banks too big to fail? It can’t be solved because no major U.S. financial institution has come close to collapsing in the decade that followed Lehman Brothers’ failure. Only a true calamity, the conventional wisdom goes, will test the mettle of watchdogs, central bankers and politicians.

Former U.S. Representative Frank appears on the Fox News Channel

Breakingviews - The Exchange: Frank on finance

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.

Podcasts

Breakingviews - The Exchange: Kevin Rudd

Australia's prime minister in 2008 told Breakingviews how his government decided to spend some 6 pct of GDP on tax breaks, infrastructure and cash payments to citizens. That helped the country heavily exposed to China, commodities, finance and housing avoid a recession – just.