The basic reason of Lehman going bankrupt is the amount of debt it had accumulated over a period of time. It had also given out many housing loans which further increased the debt. There has been significant reduction in the prices of real estate due to the mortgage crisis in the US. The bank had bought many properties for mortgages but when their prices decreased, it went against the bank. The bank raised the interest rates for the housing loans which made the repayment of loans very difficult for the borrowers. This caused a $60 billion loss to Lehman Brothers in real estate loans.
When Lehman had had a total debt of $639 billion in various areas, it made an offer to Barclay's and Bank of America for acquisition but both the banks turned down the offer because in the past, Lehman had failed to keep good relations with these top banks in the country. So in the end, Lehman had to file for bankruptcy.
When Lehman had had a total debt of $639 billion in various areas, it made an offer to Barclay's and Bank of America for acquisition but both the banks turned down the offer because in the past, Lehman had failed to keep good relations with these top banks in the country. So in the end, Lehman had to file for bankruptcy.
