Announcing Our Best Books of 2021

The Lehman Brothers: Background information when reading Behold the Dreamers

Summary |  Excerpt |  Reviews |  Beyond the Book |  Readalikes |  Genres & Themes |  Author Bio

Behold the Dreamers

by Imbolo Mbue

Behold the Dreamers by Imbolo Mbue X
Behold the Dreamers by Imbolo Mbue
  • Critics' Opinion:

    Readers' Opinion:

  • First Published:
    Aug 2016, 400 pages
    Paperback:
    Jun 2017, 416 pages

    Genres

  • Rate this book


Book Reviewed by:
Kim Kovacs
Buy This Book

About this Book

The Lehman Brothers

This article relates to Behold the Dreamers

Print Review

Clark Edwards, one of the main characters in Behold the Dreamers, works as an executive for Lehman Brothers.

Lehman Brothers Holdings, Inc. was the fourth-largest investment bank in the United States at the time of the housing market crash (2007-2009), employing over 25,000 employees worldwide.

Emanuel and Mayer Lehman The company began in 1844 as a small dry-goods store in Montgomery, Alabama, owned and operated by 23-year-old Henry Lehman, an immigrant from Rimpar, Bavaria. His brother Emanuel joined the business in 1847, followed by another brother – Mayer – in 1850, and in that year the store, originally named just H. Lehman, was rechristened Lehman Brothers. During the 1850s the brothers began bartering their inventory for locally harvested cotton, a commodity that became a main driver of the United States economy during that time. When the market moved to New York City, Emanuel relocated and opened a branch office there in 1858. After the end of the U.S. Civil War, the company moved their headquarters to New York and helped finance Alabama's reconstruction.

Savvy businessmen, the brothers helped found the New York Cotton Exchange in 1870, the first commodities futures trading company. As that enterprise grew they branched out, establishing a Coffee Exchange as well as a Petroleum Exchange. They added trading in railroad bonds and providing financial advice to their corporate resume, and gradually transitioned from a commodities business to a house of issue (an investment bank that underwrites initial public stock offerings). In 1887 the firm became a member of the New York Stock Exchange, finalizing the shift to a full-time, merchant banking business. In the early 20th century Lehman Brothers underwrote nearly 100 IPOs (often with their partner, Goldman, Sachs & Company), including venerable businesses such as Sears, Roebuck & Company, F.W. Woolworth Company, R.H. Macy & Company, The Studebaker Corporation, and B.F. Goodrich.

Robert ("Bobbie") Lehman, Emanuel's grandson, led the company from 1925 to 1969. He believed that consumption, not production, would determine the strength of the U.S. economy. He had his staff identify businesses in these areas that were likely to grow rapidly, and as a result Lehman Brothers became a major financer of motion picture companies such as RKO, Paramount and 20th Century Fox, as well as a backer of several emerging airlines.

The old U.S. headquarters of Lehman Brothers in New York City The company continued to grow in spite of setbacks during the Great Depression of the 1930s and the Recession of the 1970s. They were acquired by Shearson/American Express in 1984 for $360 million, but in 1994 AmEx divested itself of the company, spinning it off as the Lehman Brothers Holdings, Inc.

Seeing opportunities for growth in the housing market, the company borrowed a significant amount of money to invest in housing-related assets in the early 2000s. It was an immensely profitable venture, but was also extremely risky; a mere 3%-4% reduction in the value of these assets would wipe out almost all the company's equity. In 2003 and 2004 they acquired five mortgage lenders including BNC Mortgage and Aurora Loan Services, companies which specialized in loans to individuals with insufficient documentation to ensure their ability to repay the money. They produced record revenues for the business at first, but as homeowners began to default on their mortgages, housing prices fell precipitously, declining over 20% from their highest point in 2006. Lehman Brothers sold BNC and Aurora, but continued underwriting more mortgage-backed securities than any other company.

The firm reported losses of $2.8 billion in the second quarter of 2008, and its stock lost 73% of its value. A week after declaring an additional $3.9 billion loss, they filed for Chapter 11 bankruptcy protection on September 15, 2008 - to date the largest bankruptcy filing in U.S. history. This prompted a sell-off in the commercial mortgage-backed securities market, which in turn caused a 500-point drop in the Dow Jones Industrial Average – with worse to come in the following weeks. Lehman Brothers, which was acquired by the British banking firm Barclays for $1.75 billion in 2008, is consequently widely credited with being responsible for the financial crisis that ensued.

Picture of Lehman brothers by ButtonwoodTree
Picture of Lehman's old NYC headquarters now owned by Barclays, by David Shankbone

Filed under People, Eras & Events

Article by Kim Kovacs

This "beyond the book article" relates to Behold the Dreamers. It originally ran in August 2016 and has been updated for the June 2017 paperback edition. Go to magazine.

This review is available to non-members for a limited time. For full access become a member today.
Membership Advantages
  • Reviews
  • "Beyond the Book" articles
  • Free books to read and review (US only)
  • Find books by time period, setting & theme
  • Read-alike suggestions by book and author
  • Book club discussions
  • and much more!
  • Just $12 for 3 months or $39 for a year.
  • More about membership!

Join BookBrowse

Become a Member and discover books that entertain, engage & enlighten.

Find out more


Today's Top Picks

  • Book Jacket: The Book of Mother
    The Book of Mother
    by Violaine Huisman
    Fictionalizing the life of author Violaine Huisman's own mother, this debut novel is split into ...
  • Book Jacket
    People from My Neighborhood
    by Hiromi Kawakami
    People from My Neighborhood is exactly what it sounds like — an unnamed narrator recounts a ...
  • Book Jacket
    Win Me Something
    by Kyle Lucia Wu
    Kyle Lucia Wu's Win Me Something opens with a young woman named Willa explaining that she did not ...
  • Book Jacket: The Island of Missing Trees
    The Island of Missing Trees
    by Elif Shafak
    The Island of Missing Trees by Elif Shafak tells a tale of generational trauma, explores identity ...

Readers Recommend

  • Book Jacket

    Beasts of a Little Land
    by Juhea Kim

    An epic story of love, war, and redemption set against the backdrop of the Korean independence movement.

Who Said...

Use what talents you possess: The woods would be very silent if no birds sang there except those that sang best

Click Here to find out who said this, as well as discovering other famous literary quotes!

Wordplay

Solve this clue:

I Y Can't S T H, G O O T K

and be entered to win..

Books that     
entertain,
     engage

 & enlighten

Visitors can view some of BookBrowse for free. Full access is for members only.

Join Today!

Your guide toexceptional          books

BookBrowse seeks out and recommends the best in contemporary fiction and nonfiction—books that not only engage and entertain but also deepen our understanding of ourselves and the world around us.