When the whole of US was undergoing a financial crisis, the Lehman Brothers was also on the verge of bankruptcy. The government made an attempt and saved many institutions dealing with finance but the exact opposite happened with Lehman Brothers. Notwithstanding that Lehman Brother had become a very weak financial institution but there were other factors playing behind the scenes which were the reasons for their downfall. A serious of political planning and conspiracies along with the pressure from the public resulted in the firm shutting down (The collapse of Lehman Brothers, 2008). The Federal reserve justified themselves by saying that they cannot bear the responsibilities of all the firms and the fact that the collapse of the Lehman Brothers would not cause much damage and problems in the country as it was a small investigating firm as opposed to the companies like AIG or Bear Streams which was saved by the government (Davies, 2014). However their collapse caused ripples in the Economy of US and the message that was circulating that the US government can stop helping any institution at any point of time. However the negative impacts had just begun. The safety of any other financial firm was now in danger. It is noticed that it was more of a political conspiracy and planning between the top government official which led to the Lehman Brothers bankruptcy (Kohler, 2010).
Crisis and Lehman Brother bankruptcy
It is often believed that the crisis situation started in the US with the bankruptcy of Lehman Brothers but this is not the case. The crisis originated when the markets of mortgage bank securities had crashed down. The internal relations of Lehman Brothers was disturbed as this firm possessed large amount of mortgage bank securities and when their condition was revealed in front of the world all the investors backed out from the company (Sharma, 2014). As seen the FED refused to give it any assistance and justified its actions in every possible ways. The government had no doubt made an attempt to sail through this smoothly but the loophole was that the government was paying individual attention to the firms and not to the market