Update: A statement from Ernst and Young: Lehman’s bankruptcy occurred in the midst of a global financial crisis triggered by dramatic increases in mortgage defaults, associated losses in mortgage and real estate portfolios, and a severe tightening of liquidity.
We firmly believe that our work met all applicable professional standards, applying the rules that existed at the time. Lehman’s demise was caused by the global financial crisis that impacted the entire financial sector, not by accounting or financial reporting issues.
It’s hard to overstate the enormity of the 2008 collapse of Lehman Brothers. It was the largest bankruptcy in history; 26,000 employees lost their jobs; millions of investors lost all or almost all of their money; and it triggered a chain reaction that produced the worst financial crisis and economic downturn in 70 years.
Yet four years later, no one at Lehman has been held responsible. Steve Kroft investigates the collapse of Lehman Brothers: what the SEC did and didn’t know about the firm’s finances, the role of a top accounting firm, and why no one at Lehman has been called to account.
The following script is from “The Case Against Lehman” which originally aired on April 22, 2012. Steve Kroft is the correspondent. James Jacoby and Michael Karzis, producers.
On September 15, 2008, Lehman Brothers, the fourth largest investment bank in the world, declared bankruptcy — sparking chaos in the financial markets and nearly bringing down the global economy. It was the largest bankruptcy in history — larger than General Motors, Washington Mutual, Enron, and Worldcom combined. The federal bankruptcy court appointed Anton Valukas, a prominent Chicago lawyer and former United States attorney to conduct an investigation to determine what happened.
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