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> Recall that Lehman Brothers and AIG were not banks. AIG was an insurance company, yes. But Lehman Brothers was an investment bank. From Wikipedia: > in 20
by scribu 7y ago
> Recall that Lehman Brothers and AIG were not banks.
AIG was an insurance company, yes.
But Lehman Brothers was an investment bank.
From Wikipedia:
> in 2008, Lehman was the fourth-largest investment bank in the United States
- formercoder 7y agoLehman was a pure investment bank and therefore the government refused to bail them out - they did not want to be the lender of last resort to an entity they could not regulate strongly. Once everyone saw this almost all of them converted to “commercial banks,” even Goldman, in order to receive bailouts. The exception is Jefferies, leaving them as the only bank on Wall Street with a balance sheet that lends over 6x ebitda.
- Merrill 7y ago"Investment banks" were only colloquially banks. They were not members of the Federal Reserve, not regulated by the Office of the Comptroller of the Currency, and not FDIC insured. Survivors became banks after the crisis, but in their place we now have lots of hedge funds, private equity funds, etc. that have grown large to do similar financial operations without bank regulation. https://en.wikipedia.org/wiki/Shadow_banking_system https://en.wikipedia.org/wiki/Shadow_banking_system
- TuringNYC 7y agoIn industry speak “bank” refers to institutions taking deposits and lending to a single entity — retail and commercial banks, not investment banks, etc Side note: AIG managed to get regulatory treatment as a bank via OTS by having a tiny tiny tiny retail banking operation called AIG Bank. OTS ended up being the primary regulatory of the overall entity! https://en.wikipedia.org/wiki/Office_of_Thrift_Supervision https://en.wikipedia.org/wiki/Office_of_Thrift_Supervision