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Ten lessons of a banking collapse, in Lehman’s terms

Lehman Brothers had two distinct histories: one of a migrant family and its descendants who created an American success story, the other of the contemporary Wall Street types who threw it all away. Behind this sad tale lie what we might call the 10 lessons of Lehman.

1. Always have an exit route. The original brothers Lehman came to the US from Bavaria in the 1840s, peddling household goods on the byways of the south before setting up as cotton brokers in Montgomery, Alabama. As the American civil war approached, they widened their options and began moving north to New York, where they established their bank. In September 2008 the final head of Lehman, Dick Fuld, had no such alternatives as he waited for destruction to close in.

2. Be on the inside. Lehman Brothers had the ear of presidents from Teddy Roosevelt to Richard Nixon but lost such links when bond traders in the mould of Mr Fuld took over in the 1980s. These were merchants of fast transactions rather than long-built relationships. Goldman Sachs, on the other hand, has nurtured relations with government since the 1930s. When Hank Paulson, the Bush administration Treasury secretary and former head of Goldman, distributed bail-out funds after the crash of 2008, his old company won a generous share. Lehman Brothers went to the wall.

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