Too Big to Fail

Too Big to Fail – Case Study


  • What were the main issues that paved the way to the financial crisis in late 2008? (2pts)


  • After the collapse and selling of Bear Sterns, media started to buzz, and Lehman brothers were assuring their customers on the impact of the mortgage crisis and on their assets. Although, the shares of Lehman Brothers started to face “a great deal of pressure” on the following morning. Based on this, what do you think about the role of the media during the financial crisis of 2008? (1pt)


  • When investors heard the news on Lehman Brothers, what did they start to do (other than selling their stocks)? (1pt)


  • Why do you think Richard Fuld wanted to talk to Warren Buffet? Was the move of Warren Buffet expected? (2pts)


  • If you were the head of the Fed., would you have taken a decision to bailout these institutions? Why? (2pts)


  • What was the last-resort solution that was proposed by the treasury? Why it didn’t work out? (2pts)




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