Today is the anniversary of the big bang. On 15 September 2008, exactly 12 years ago, the sudden and unexpected bankruptcy of the American investment bank took place Lehman Brothers. At the time, no one had any idea of the consequences that crack would have triggered: in fact, it was the pebble which, rolling downstream, turned into an avalanche, sweeping everything away. From there, the domino effect began at the origin of the systemic crisis, a financial nightmare that caused the global economic recession and that within a few years would also cause the European sovereign debt crisis.
But how did it get to that point? The original sin was that of subprime mortgages. In a nutshell, American banks were pushing customers to use houses as ATMs. For years, series of real estate loans were taken out: the new loans served to pay off the previous ones, but, being of a higher amount (because house prices had risen in the meantime), they allowed families to pocket the difference. Result: as soon as real estate prices stopped rising, the toy broke and millions of Americans found themselves with unpayable mortgages. At that point the banks took over the houses, creating real ghost towns in some areas.
Unfortunately, it's not over. While they were giving subprime money to the lower middle class, the institutions issued complex financial securities backed by those mortgages. Derivative products which they then sold by deception: they knew they were dealing with waste paper – because it was clear that the subprime would never be repaid – but they made investors believe that they were excellent products. All with the complicity of the rating agencies, which (paid by the banks themselves, and therefore in conflict of interest) assigned triple A to those securities, i.e. the maximum reliability rating.
At first the banks placed these derivatives with external customers, but then they began to exchange them: with their vision blurred by the gains associated with trading, they pretended not to see that the speculative bubble was about to burst. In reality, subprime mortgages represented a small part of the American financial market, but the bankruptcy of Lehman sent the system into a tailspin and opened the door to the Great Crisis.
The knockout blow came on September 15, 2008, with the most disastrous bankruptcy in world history. Before being suspended that day, Lehman Brothers shares plunged 80% in the pre-open phase on Wall Street, while the Dow Jones index closed 500 points lower, the worst result since the session following September 11, 2001. The bank's 26.000 employees (of which 6.000 in Europe and 140 in Italy, between Rome and Milan) instantly lost their jobs.
Richard Fuld, the chairman and CEO of Lehman, who had filed falsified financial statements and bribed several members of Congress, was investigated by other members of Congress, but not by the judiciary, and subsequently continued to work in high-paying positions. In general, all those responsible for the bankruptcy were acquitted or even tried. The rest of the planet paid.
