Lehman Brothers

Lehman Brothers (article)
= Lehman Brothers Holdings Inc. = Updated: May 28, 2010

 Overview 

Vocabulary Lehman Brothers was founded in 1850 by two cotton brokers in Montgomery, Ala. The firm moved to New York City after the Civil War and grew into one of Wall Street's investment giants. On Sept. 14, 2008, the investment bank announced that it would file for liquidation after huge losses in the mortgage market and a loss of investor confidence crippled it and it was unable to find a buyer.

In March 2010, a 2,200-page document laid out in new and startling detail how Lehman used accounting sleight of hand to conceal the bad investments that led to its undoing. The report, compiled by an examiner for the bank, concluded that, among other things, the firm's demise was the result of bad mortgage holdings and, less directly, demands by rivals like JPMorgan Chase and Citigroup, that the foundering bank post collateral against loans it desperately needed.

Lehman also used a small company — its "alter ego," in the words of a former Lehman trader — to shift investments off its books, according to an article in The New York Times in April. The relationship raised new questions about the extent to which Lehman obscured its financial condition before it plunged into bankruptcy.

The failed investment bank may have cause to sue Goldman Sachs and Barclays for what might be a "fraudulent transaction," according to a portion of the examiner's report unsealed mid-April.

In May, Lehman Brothers Holdings and a group of unsecured creditors filed a lawsuit against JPMorgan Chase for more than $5 billion, saying it siphoned billions of dollars of Lehman assets, thus hastening its bankruptcy.

 A History That Included Close Calls 

Lehman's slow collapse began as the mortgage market crisis unfolded in the summer of 2007, when its stock began a steady fall from a peak of $82 a share. The fears were based on the fact that the firm was a major player in the market for subprime and prime mortgages, and that as the smallest of the major Wall Street firms, it faced a larger risk that large losses could be fatal.

The bank's demise set off tremors throughout the financial system. The uncertainty surrounding its transactions with banks and hedge funds exacerbated a crisis of confidence. That contributed to credit markets freezing, forcing governments around the globe to take steps to try to calm panicked markets.

As the crisis deepened in 2007 and early 2008, the storied investment bank defied expectations more than once, just it had many times before, as in 1998, when it seemed to teeter after a worldwide currency crisis, only to rebound strongly.

Lehman managed to avoid the fate of Bear Stearns, the other of Wall Street's small fry, which was bought by JP Morgan Chase at a bargain basement price under the threat of bankruptcy in March 2008. But by summer of 2008 the rollercoaster ride started to have more downs than ups. A series of write-offs was accompanied by new offerings to seek capital to bolster its finances.

Lehman also fought a running battle with short sellers. The company accused them of spreading rumors to drive down the stock's price; Lehman's critics responded by questioning whether the firm had come clean about the true size of its losses. As time passed and losses mounted, an increasing number of investors sided with the critics.

On June 9, 2008, Lehman announced a second-quarter loss of $2.8 billion, far higher than analysts had expected. The company said it would seek to raise $6 billion in fresh capital from investors. But those efforts faltered, and the situation grew more dire after the government on Sept. 8 announced a takeover of Fannie Mae and Freddie Mac. Lehman's stock plunged as the markets wondered whether the move to save those mortgage giants made it less likely that Lehman might be bailed out.

On Sept. 10, the investment bank said that it would spin off a majority of its remaining commercial real estate holdings into a new public company. And it confirmed plans to sell a majority of its investment management division in a move expected to generate $3 billion. It also announced an expected loss of $3.9 billion, or $5.92 a share, in the third quarter after $5.6 billion in write-downs.

 Bankrupt With No Bailout in Sight 

By the weekend of Sept. 13-14, it was clear that it was do or die for Lehman. The Treasury had made clear that no bailout would be forthcoming. Federal officials encouraged other institutions to buy Lehman, but by the end of the weekend the two main suitors, Barclays and Bank of America, had both said no.

Lehman filed for bankruptcy Sept. 15. One day later, Barclays said it would buy Lehman's United States capital markets division for $1.75 billion, a bargain price. Nomura Holdings of Japan agreed to buy many of Lehman's assets in Europe, the Middle East and Asia. Lehman also said it would sell much of its money management business, including its prized Neuberger Berman asset management unit, to Bain Capital and Hellman & Friedman for $2.15 billion.

On Oct. 5, Richard S. Fuld Jr., Lehman's chief executive, testified before a Congressional panel that while he took full responsibility for the debacle, he believed all his decisions "were both prudent and and appropriate" given the information at the time.

 Negligence and Accounting Tricks 

In the March 2010, Anton R. Valukas, an examiner for the bank, laid out for the first time what his report characterized as "materially misleading" accounting gimmicks that Lehman used to mask the perilous state of its finances. Lehman used what amounted to financial engineering to temporarily shuffle $50 billion of troubled assets off its books in the months before its collapse in September 2008 to conceal its dependence on leverage, or borrowed money.

Senior Lehman executives, as well as the bank's accountants at Ernst & Young, were aware of the moves, according to Mr. Valukas, the chairman of the law firm Jenner & Block and a former federal prosecutor, who filed the report in connection with Lehman's bankruptcy case.

Mr. Fuld certified the misleading accounts, the report said, which called him "at least grossly negligent." The report also stated that Henry M. Paulson Jr., who was then the Treasury secretary, warned Mr. Fuld that Lehman might fail unless it stabilized its finances or found a buyer.

The report drew no conclusions as to whether Lehman executives violated securities laws. But it did suggest that enough evidence exists for potential civil claims. Lehman executives are already defendants in civil suits, but have not been charged with any criminal wrongdoing.

The New York Times reported in April 2010 that a firm called Hudson Castle played a crucial, behind-the-scenes role at Lehman, shifting investments off its books. While Hudson Castle appeared to be an independent business, it was deeply entwined with the bank. For years, its board was controlled by Lehman, which owned a quarter of the firm. It was also stocked with former Lehman employees, but none of this was disclosed.

Entities like Hudson Castle are part of a vast financial system that operates in the shadows of Wall Street, largely beyond the reach of banking regulators. These entities enable banks to exchange investments for cash to finance their operations and, at times, make their finances look stronger than they are.

A section of the examiner's report disclosed on April 14 said that a transaction transferred $2 billion in assets from C.M.E. Group, which operates the Chicago and New York mercantile exchanges. The assets were collateral and clearing deposits held by C.M.E. and linked to Lehman's futures and options contracts — proprietary trades that Goldman, Barclays, and another firm, DRW Trading, would take on along with the collateral transfer in question.

The transfer resulted in what the report said was "a loss to Lehman exceeding $1.2 billion." Mr. Valukas concluded that "an argument can be made that the transfers at issue were fraudulent transfers avoidable" under bankruptcy law.

 In its May lawsuit, Lehman Brothers Holdings accused JPMorgan of extracting billions of dollars in collateral for loans prior to Lehman's bankruptcy by threatening to deprive the bank of services vital to its broker-dealer business.

Answer the following questions:
 1. What were the reasons for the bank`s demise?

 2. What were the repercussions of LB`s collapse?

 3. What kind of battle was D.Fuld engaged in with short sellers?

 4. Why did the situation for LB become more dire in summer of 2008?

 5. How did further events unfold in the fall of 2008?

 6. What facts of wrongdoings in the bank did Valukas` report reveal?

 7. What role did Hudson Castle play in Lehman`s affairs?



The Fall of Lehman Brothers (video)
https://www.youtube.com/watch?v=aPOtQkSiCk8&feature=player_embedded

 Language  input :

 due diligence           - проверка соответствия фактического статуса компании заявленному;

                                   должная проверка; экспертный анализ

    Pre-viewing 

 1) Ponder the following questions: 

 1 What is a mortgage loan? What documents should you give to the bank if you take a mortgage loan?

<p class="MsoNormal"> 2 What is a stock market? How does it react to a company’s changes? What indicators on a stock market show a company’s success or failure in business?

<p class="MsoNormal"> 3 What is the ratio of company’s assets and liabilities if it goes to the wall?

<p class="MsoNormal"> 2) Match the words having similar meanings:  <p class="MsoNormal"> While viewing 

<p class="MsoNormal"> 1) Identify the English equivalents for the following: 

<p class="MsoNormal" style="margin-left:42.0pt">        1     положить конец слухам

<p class="MsoNormal" style="margin-left:78.0pt;text-indent:-18.0pt;mso-list:l8 level1 lfo1; tab-stops:list 78.0pt"> 2         переломный момент

<p class="MsoNormal" style="margin-left:78.0pt;text-indent:-18.0pt;mso-list:l8 level1 lfo1; tab-stops:list 78.0pt"> 3         ипотечное кредитование прекратилось

<p class="MsoNormal" style="margin-left:78.0pt;text-indent:-18.0pt;mso-list:l8 level1 lfo1; tab-stops:list 78.0pt"> 4         предприятия обанкротились

<p class="MsoNormal" style="margin-left:78.0pt;text-indent:-18.0pt;mso-list:l8 level1 lfo1; tab-stops:list 78.0pt"> 5         те, кто находился в эпицентре событий

<p class="MsoNormal" style="margin-left:78.0pt;text-indent:-18.0pt;mso-list:l8 level1 lfo1; tab-stops:list 78.0pt"> 6         министр финансов

<p class="MsoNormal" style="margin-left:78.0pt;text-indent:-18.0pt;mso-list:l8 level1 lfo1; tab-stops:list 78.0pt"> 7         банк нес колоссальные убытки

<p class="MsoNormal" style="margin-left:78.0pt;text-indent:-18.0pt;mso-list:l8 level1 lfo1; tab-stops:list 78.0pt"> 8         поддержать жизнеспособность банка с помощью вливания в него

<p class="MsoNormal" style="margin-left:78.0pt">денежных средств

<p class="MsoNormal" style="margin-left:78.0pt;text-indent:-18.0pt;mso-list:l8 level1 lfo1; tab-stops:list 78.0pt"> 9         позволить рынку самому определять дальнейшее развитие событий

<p class="MsoNormal" style="margin-left:78.0pt;text-indent:-18.0pt;mso-list:l8 level1 lfo1; tab-stops:list 78.0pt"> 10     акционеры сбрасывали акции

<p class="MsoNormal" style="margin-left:78.0pt;text-indent:-18.0pt;mso-list:l8 level1 lfo1; tab-stops:list 78.0pt"> 11     другие банки отзывали кредиты

<p class="MsoNormal" style="margin-left:78.0pt;text-indent:-18.0pt;mso-list:l8 level1 lfo1; tab-stops:list 78.0pt"> 12     обанкротиться

<p class="MsoNormal" style="margin-left:78.0pt;text-indent:-18.0pt;mso-list:l8 level1 lfo1; tab-stops:list 78.0pt"> 13     из-за освещения в СМИ

<p class="MsoNormal" style="margin-left:78.0pt;text-indent:-18.0pt;mso-list:l8 level1 lfo1; tab-stops:list 78.0pt"> 14     признает ли рынок Lehman безнадежным

<p class="MsoNormal" style="margin-left:78.0pt;text-indent:-18.0pt;mso-list:l8 level1 lfo1; tab-stops:list 78.0pt"> 15     у нас появилась хорошая возможность очень внимательно изучить

<p class="MsoNormal" style="margin-left:78.0pt">отчетную документацию

<p class="MsoNormal" style="margin-left:78.0pt;text-indent:-18.0pt;mso-list:l8 level1 lfo1; tab-stops:list 78.0pt"> 16     мы бы не затевали этот проект

<p class="MsoNormal" style="margin-left:78.0pt;text-indent:-18.0pt;mso-list:l8 level1 lfo1; tab-stops:list 78.0pt"> 17     прежние успехи банка были заслугой одного человека

<p class="MsoNormal" style="margin-left:78.0pt;text-indent:-18.0pt;mso-list:l8 level1 lfo1; tab-stops:list 78.0pt"> 18     исторически значимая фигура

<p class="MsoNormal" style="margin-left:78.0pt;text-indent:-18.0pt;mso-list:l8 level1 lfo1; tab-stops:list 78.0pt"> 19     он прокладывал себе путь к вершине

<p class="MsoNormal" style="margin-left:78.0pt;text-indent:-18.0pt;mso-list:l8 level1 lfo1; tab-stops:list 78.0pt"> 20     у меня дух захватывает

<p class="MsoNormal" style="margin-left:78.0pt;text-indent:-18.0pt;mso-list:l8 level1 lfo1; tab-stops:list 78.0pt"> 21     внутри компании его почитали как бога

<p class="MsoNormal" style="text-align:justify">  2) Translate from English into Russian: 

<p class="MsoNormal"> Put an end

<p class="MsoNormal"> Emerge from the cycle stronger

<p class="MsoNormal"> Tipping point

<p class="MsoNormal"> Stock market tumbled

<p class="MsoNormal"> Shareholders were dumping stocks

<p class="MsoNormal"> Withhold credits

<p class="MsoNormal"> Businesses went to the wall

<p class="MsoNormal"> Share price dropped

<p class="MsoNormal"> Share price was in free fall

<p class="MsoNormal"> Confidence in the bank was evaporating under the glare of media spotlight

<p class="MsoNormal"> Anticipate

<p class="MsoNormal"> Face a dilemma

<p class="MsoNormal"> Economic might

<p class="MsoNormal"> Crash on the market

<p class="MsoNormal"> To be dangerously exposed

<p class="MsoNormal"> Come up with the solution government bailout

<p class="MsoNormal"> It is going to be a seminal event in the credit crunch

<p class="MsoNormal"> The success was largely down to one man

<p class="MsoNormal"> Raise money

<p class="MsoNormal"> He worked his way steadily and determinately

<p class="MsoNormal"> Overtake rivals

<p class="MsoNormal"> Due diligence

<p class="MsoNormal"> Collapse in house pricing

<p class="MsoNormal"> Unprecedented losses

<p class="MsoNormal"> Overtake rivals

<p class="MsoNormal"> His reputation preceded him

<p class="MsoNormal">        3) Fill in the gaps using these key words:  <p class="MsoNormal">        1. It was the biggest bankruptcy in history and the …1… into global recession.

<p class="MsoNormal" style="margin-left:18.0pt"> 2. Lehman was a …2… moment in the sense that it illustrated these two big problems that

<p class="MsoNormal" style="margin-left:36.0pt"> if we didn`t solve, things would get a huge amount worse.

<p class="MsoNormal">       3. Stock markets …3… and business went to the wall.

<p class="MsoNormal">         4. With only an hour`s…4…, he …5… the chief executives of America`s leading banks –

<p class="MsoNormal">           the so-called “masters of the universe” – to a crisis meeting.

<p class="MsoNormal">       5. Confidence in the bank was evaporating under the glare of the media…6….

<p class="MsoNormal">       6. In the last few months, the…7…from the sub-prime mortgage crisis and the …8… in

<p class="MsoNormal">            house prices had forced the US Treasury to bail out one bank and America`s two biggest

<p class="MsoNormal">           mortgage companies.

<p class="MsoNormal">       7. As the leaders of Wall Street …9…with what to do about Lehman Brothers, across town at

<p class="MsoNormal">           Shea Stadium, the home team, the Mets, were trailing to the Atlanta Braves.

<p class="MsoNormal">       8. With no government …10…,two of Lehman`s rivals were eager …11….

<p class="MsoNormal">       9. When he finished university, the bank…12…him up.

<p class="MsoNormal">       10. Lehman Brothers will eventually inherit the …13…and the tradition that will let us stand

<p class="MsoNormal">            alone and …14… all the people that stand in front of us.

<p class="MsoNormal">       11. He strode like …15… through his …16… and his reputation preceded him.

<p class="MsoNormal">       12. That was a man who was clearly …17….

<p class="MsoNormal">              3) Match the words to produce the proper collocations:  <p class="MsoNormal">             4) Answer the following questions: 

<p class="MsoNormal"> 1. Why did Lehman`s bankruptcy have such catastrophic consequences for the world?

<p class="MsoNormal"> 2. What triggered off anxiety among Wall Street executives in regard to Lehman Brothers?

<p class="MsoNormal"> 3. What was Lehman`s share price development?

<p class="MsoNormal"> 4. Explain the phrase, “It`s Main Street, not Wall Street, that matters”.

<p class="MsoNormal"> 5. What kind of transformation did the bank undergo under Fuld?

<p class="MsoNormal"> 6. What was Fuld`s great ambition?

<p class="MsoNormal"> 7. What kind of leadership did Fuld practice?

<p class="MsoNormal"> 8. Why is Lehman`s bankruptcy considered to be a seminal point in the history of the credit c

<p class="MsoNormal">     crunch?

<p class="MsoNormal"> After viewing 

<p class="MsoNormal" style="margin-left:36.0pt;text-indent:-18.0pt;mso-list:l3 level1 lfo2; tab-stops:list 36.0pt"> 1)         Work in pairs or small groups. One or two students play the role of a reporter, the other(s) are characters who feature in the first part of the video. Together they plan and roleplay an interview to follow up on the issues mentioned in the film.

<p class="MsoNormal" style="margin-left:36.0pt;text-indent:-18.0pt;mso-list:l3 level1 lfo2; tab-stops:list 36.0pt"> 2)         Narrate the events of part 1 in logical sequence.

<p class="MsoNormal" style="margin-left:18.0pt">

<p class="MsoNormal">                                                  PART 2 

<p class="MsoNormal">https://www.youtube.com/watch?v=l0N_FX0kUMI&feature=relmfu

<p class="MsoNormal"> Language input  <p class="MsoNormal">       3 mortgage-backed securities                                     ценные бумаги, обеспеченные ипотеками <p class="MsoNormal"> Pre-viewing 

<p class="MsoNormal"> 1) Ponder the following questions: 

<p class="MsoNormal" style="margin-left:72.0pt;text-align:justify;text-indent: -18.0pt;line-height:150%;mso-list:l4 level2 lfo8;tab-stops:list 72.0pt"> 1)         What are the ways of   increasing a company’s profits?

<p class="MsoNormal" style="margin-left:72.0pt;text-align:justify;text-indent: -18.0pt;line-height:150%;mso-list:l4 level2 lfo8;tab-stops:list 72.0pt"> 2)         What are the golden laws for managing company’s finances?

<p class="MsoNormal" style="margin-left:72.0pt;text-align:justify;text-indent: -18.0pt;line-height:150%;mso-list:l4 level2 lfo8;tab-stops:list 72.0pt"> 3)         What is a balance sheet? What information about a company can you get from it?

<p class="MsoNormal" style="margin-left:72.0pt;text-align:justify;text-indent: -18.0pt;line-height:150%;mso-list:l4 level2 lfo8;tab-stops:list 72.0pt"> 4)         What is leverage? How does it work if the company’s profit rockets and drops?

<p class="MsoNormal" style="margin-left:36.0pt;text-indent:-18.0pt;mso-list:l2 level1 lfo3; tab-stops:list 36.0pt">    1)         Match the words having similar meanings:  <p class="MsoNormal"> While viewing 

<p class="MsoNormal"> 1) Identify the English equivalents for the following: 

<p class="MsoNormal">           1. Дик выступал   как государственный деятель и с успехом производил устрашаю-

<p class="MsoNormal">               щее впечатление на биржевых маклеров.

<p class="MsoNormal">           2. Банк увеличил свои доходы за счет новых сверхприбыльных продуктов, пользуясь

<p class="MsoNormal">               тем, что рынок стал менее контролируемым.

<p class="MsoNormal">           3. Это создало ложное ощущение уверенности на рынке.

<p class="MsoNormal">           4. Для тех сотрудников, которые подписались под убеждениями Дика.

<p class="MsoNormal">           5….противники, которых Dick Fuld похвалялся раздавить, сидели и решали его

<p class="MsoNormal">             судьбу.

<p class="MsoNormal">           6. Даже многие из его сторонников чувствовали, что его склонность вечно

<p class="MsoNormal">               раздражаться, может навредить ситуации.

<p class="MsoNormal">           7. Они проводили экспертный анализ, изучая счета Lehman, для того, чтобы полу-

<p class="MsoNormal">               чить правильное представление о финансовом положении компании.

<p class="MsoNormal">           8. Они пришли к выводу, что крах на рынке недвижимости привел к образованию

<p class="MsoNormal">               огромной дыры в балансе Lehman.

<p class="MsoNormal">           9. Итак, он ухватился за возможность спасти свой собственный банк.

<p class="MsoNormal">           10. …имеет смысл нам с ним рассмотреть ряд стратегических вариантов.

<p class="MsoNormal">           11. Это решило все. Теперь каждый был сам за себя.

<p class="MsoNormal" style="line-height:150%"> 2) Translate from Russian into English: 

<p class="MsoNormal" style="line-height:150%"> Insatiable appetite for

<p class="MsoNormal" style="line-height:150%"> 20-fold increase

<p class="MsoNormal" style="line-height:150%"> Lucrative new products

<p class="MsoNormal" style="line-height:150%"> Credit default swaps

<p class="MsoNormal" style="line-height:150%"> Overall system

<p class="MsoNormal" style="line-height:150%"> Stale pizza

<p class="MsoNormal" style="line-height:150%"> Salvage

<p class="MsoNormal" style="line-height:150%"> Property crash

<p class="MsoNormal" style="line-height:150%"> Take somebody by surprise

<p class="MsoNormal" style="line-height:150%"> Have a roving eye

<p class="MsoNormal" style="line-height:150%"> Emotional drain

<p class="MsoNormal" style="line-height:150%"> Grab the chance

<p class="MsoNormal" style="line-height:150%"> Hammer out an agreement

<p class="MsoNormal" style="line-height:150%"> Be in the predicament

<p class="MsoNormal" style="line-height:150%"> Be appalled

<p class="MsoNormal"> 3) Fill in the gaps in the sentences using these key words:  <p class="MsoNormal">

<p class="MsoNormal" style="margin-left:18.0pt"> 4) Fill in the gaps using relevant word/words: 
 * 1) When advisers started going through Lehman`s accounts, what they found …1…them.
 * 2) The following morning most New Yorkers were…2… the drama playing out down in lower Manhattan.
 * 3) Dick Fuld was still …3… Bank of America making him a proposal, but was about to learn that his suitor had a…4….
 * 4) John Thain, the chief executive of Merrill Lynch, was the new kid …5…, but he had his own problems.
 * 5) Merrill Lynch`s share price was going down because investors were selling,…6…of how …7…this bank also was to the …8….
 * 6) So when he returned to the Fed on Saturday morning, he took a particular close interest in the…9…facing his rival.
 * 7) Watching Lehman`s representatives …10… under the pressure, he began to fear attention might next …11… his own troubled bank.

<p class="MsoNormal" style="margin-left:36.0pt;text-indent:-18.0pt;line-height: 150%;mso-list:l7 level1 lfo9;tab-stops:list 36.0pt">    1)         Dick Fuld had an ____________ appetite for profits. He _________ in 1994 one share cost $ 4. As the economy _________ by 2007 the investment was _______ $ 82, a 20-fold increase. How had the bank done this? ___ expanding into __________ new products as the market became less regulated, highly complex products, including credit default ________, a kind of insurance ________ borrowers defaulting on loans. _________ was the name of the game.

<p class="MsoNormal" style="margin-left:36.0pt;text-indent:-18.0pt;line-height: 150%;mso-list:l7 level1 lfo9;tab-stops:list 36.0pt"> 2)         For the staff who signed up for Dick Fuld’s _________, along with the bottom line came _________ which were _______ changing. In 2004 Lehman Brother’s __________ was $11.5 billion. It rewarded its staff over $ 5 billion in ____ and _________. By 2007 turnover had almost _______ with staff collecting more than $ 9 billion in pay and bonuses. And top of the file was Dick Fuld. For the years 2000-2008 he took home between $ 310-500 million. The precise figure is _____________

<p class="MsoNormal">    5) Match the words to produce the proper collocations:  <p class="MsoNormal" style="text-indent:6.0pt">    6) Answer the following questions: 

<p class="MsoNormal" style="line-height:150%"> 1.How large was the network of Lehman Brothers

<p class="MsoNormal"> 2. How did the bank   get   such a stupendous 20-fold increase in its share price?

<p class="MsoNormal"> 3. Explain the following, “I think Wall Street found, but also a lot of people believed that

<p class="MsoNormal">     modern finance was a form of alchemy”.

<p class="MsoNormal"> 4. Why are the rewards gained by those traders who pursued Fuld`s credo called life-changing?

<p class="MsoNormal"> 5. Why hadn`t Fuld been invited to the crisis meeting?

<p class="MsoNormal"> 6. What horrified the advisers carrying out due diligence?

<p class="MsoNormal"> 7. What conclusion did the experts arrive at while calculating Lehman`s losses?

<p class="MsoNormal"> 8. What problems was Merrill Lynch confronted with?

<p class="MsoNormal"> 9. Can you justify Thain`s behaviour?

<p class="MsoNormal">

<p class="MsoNormal"> After viewing 

<p class="MsoNormal" style="margin-left:18.0pt;text-align:justify;line-height: 150%"> 1) Could you continue the sentence: “The more risk you…the more…the less…the less…”

<p class="MsoNormal" style="margin-left:18.0pt"> 2) Work in pairs or small groups. One or two students play the role of a reporter, the other(s) are characters who feature in the first part of the video. Together they plan and roleplay an interview to follow up on the issues mentioned in the film.

<p class="MsoNormal" style="margin-left:18.0pt"> 3) Narrate the events of part 2 in logical sequence.

<p class="MsoNormal">                                                        PART 3 

<p class="MsoNormal">https://www.youtube.com/watch?v=YmZd3vVoPgY&feature=relmfu

<p class="MsoNormal"> Pre-viewing 

<p class="MsoNormal"> 1) Ponder the following questions: 

<p class="MsoNormal"> 1 Do you believe in financial wizards that can eradicate high risk?

<p class="MsoNormal" style="text-align:justify"> 2 What is Fed? What are its functions?

<p class="MsoNormal">   

<p class="MsoNormal">   2)     Match the words having similar meanings:  <p class="MsoNormal"> While viewing 

<p class="MsoNormal" style="margin-left:36.0pt;text-indent:-18.0pt;mso-list:l6 level1 lfo5; tab-stops:list 36.0pt"> 1)          Identify the English equivalents for the following: 

<p class="MsoNormal" style="text-align:justify">         2) Translate from English into Russian: 
 * 1) …обманутая команда Lehman пыталась сохранить бодрое выражение лица.
 * 2) …кто-то проговорился.
 * 3) Команды Barclays и Lehman вплотную подошли к совершению сделки.
 * 4) Dick Fuld столкнулся с самой серьезной проблемой в своей жизни.
 * 5) Бум подогревался кредитами с соблазнительными базовыми ставками, которые предлагались все более рисковым клиентам.
 * 6) Предполагалось, что это будет бизнес, направленные на работу инее банка.
 * 7) Это ложное ощущение безопасности подталкивало Lehman совершать операции, которых другие, более осторожные банки, сторонились.

<p class="MsoNormal"> Slip of the tongue

<p class="MsoNormal"> Entity

<p class="MsoNormal"> Suitor

<p class="MsoNormal"> Rest one’s hopes on somebody

<p class="MsoNormal"> Face a challenge

<p class="MsoNormal"> Helpless bystander

<p class="MsoNormal"> Tempting introductory rates

<p class="MsoNormal"> Pay off

<p class="MsoNormal"> NINJA mortgages

<p class="MsoNormal"> Appreciation

<p class="MsoNormal"> Sub-prime mortgage

<p class="MsoNormal"> Shy away from

<p class="MsoNormal"> Cash out

<p class="MsoNormal"> Underwriter

<p class="MsoNormal"> Down payment

<p class="MsoNormal"> Eradicate risk

<p class="MsoNormal"> Scorching valley

<p class="MsoNormal"> Lead weight

<p class="MsoNormal"> Strike a deal

<p class="MsoNormal" style="margin-left:18.0pt">    3) Fill in the gaps using these key words:  <p class="MsoNormal" style="margin-left:18.0pt">   So, having been …1…, Lehman now had only one potential suitor.

<p class="MsoNormal" style="margin-left:36.0pt"> had been able to eradicate risk.
 * 1) Still up in his midtown office, just along from Times Square, Dick Fuld was now a helpless…2…as others decided the fate of the bank he had led for so long.
 * 2) Now all the hopes …3… on Barclays.
 * 3) Both Presidents Clinton and Bush had …4… home ownership.
 * 4) We got to the point where they created mortgages that were known as …5…mortgages- “no income, job or assets” – relying solely on the …6…of housing prices.
 * 5) But the real money for Wall Street banks came not from selling mortgages to homeowners, but from trading …7… of these loans among themselves and other institutional investors.
 * 6) It`s that easy! These bundles were labeled as …8…, low-risk assets by the banks.
 * 7) We are in …9…business, not the …10…business.
 * 8) Across Wall Street, and in the City of London, there was a …11…the financial …12…

<p class="MsoNormal">  4) Match the words to produce the proper collocations: 
 * 1) That was a market belief that somehow or other everyone had …13…the problem.
 * 2) Repossessions …14… and house prices …15….
 * 3) When you can`t sell it and share the risk, then it becomes …16…on your balance sheet over time.

<p class="MsoNormal">      5) Answer the following questions: 

<p class="MsoNormal"> 1. In what way did Ken Lewis and Thain`s behaviour confirm the Wall Street maxim, “ kill or be

<p class="MsoNormal">    killed?

<p class="MsoNormal"> 2. Why did the government support for home ownership result in sub-prime explosion?

<p class="MsoNormal"> 3. What was the source of real money for Wall Street banks?

<p class="MsoNormal"> 4. Why did Lehman Brothers become the victim of the downturn in the property market?

<p class="MsoNormal"> 5. What was the growing assumption across Wall Street and in the city of London?

<p class="MsoNormal">    After viewing 

<p class="MsoNormal" style="margin-left:18.0pt"> 1) Work in pairs or small groups. One or two students play the role of a reporter, the other(s) are characters who feature in the first part of the video. Together they plan and roleplay an interview to follow up on the issues mentioned in the film.

<p class="MsoNormal" style="margin-left:18.0pt"> 3) Narrate the events of part 3 in logical sequence.

<p class="MsoNormal"> <h3 class="MsoNormal"> <p class="MsoNormal" style="margin-left:18.0pt">  The Fall of Lehman Brothers 

<p class="MsoNormal" style="margin-left:18.0pt">                     Part 4 

<h3 class="MsoNormal"> <p class="MsoNormal" style="margin-left:18.0pt">http://www.youtube.com/watch?v=FcO_dQCJ3HA

<p class="MsoNormal" style="margin-left:18.0pt"> Language  input :

<p class="MsoNormal">       FSA - Financial Services Authority (Управление по финансовому регулированию и надзору - центральный орган надзора за рынком финансовых услуг Веикобритании)

<p class="MsoNormal">       SEC - Securuties andExchange Commission (Комиссия по ценным бумагам и биржам)

<p class="MsoNormal"> While viewing 

<p class="MsoNormal"> 1) Identify English equivalents for the following: 

<p class="MsoNormal" style="margin-left:18.0pt">1. Но теперь, когда СМИ подхватили эту историю, пошли разговоры о том, что что-то

<p class="MsoNormal" style="margin-left:18.0pt">серьезное произойдет в ФРС ( Fed – Federal Reserve System ).

<p class="MsoNormal" style="margin-left:18.0pt">2. Исполнительный директор Lehman Dick Fuld загнан в угол, мягко говоря.

<p class="MsoNormal" style="margin-left:18.0pt">3. Утечка информации бьет по нам.

<p class="MsoNormal" style="margin-left:18.0pt">4. Перемалывание слухов берет начало именно отсюда.

<p class="MsoNormal" style="margin-left:18.0pt">5. Атмосфера была….довольно неприятной, потому что среди высшего руководства

<p class="MsoNormal" style="margin-left:18.0pt;text-indent:6.0pt">   Lehman прочно укрепилось мнение о том, что весь мир ополчился против нас.

<p class="MsoNormal">       6. Достаточно ли у Lehman денежных средств, чтобы выстоять?

<p class="MsoNormal">       7. С банком Lehman будет покончено, если секретарь казначейства не подпишется под  гарантией.

<p class="MsoNormal">       8. Судьба Lehman зависела от этого звонка, а время истекало.

<p class="MsoNormal">       9. Мы всегда хорошо оценивали перспективы того, что может сработать и того, что

<p class="MsoNormal">           никогда не будет работать.

<p class="MsoNormal">       10. Не будет никакого рыцаря в сияющих доспехах.

<p class="MsoNormal" style="margin-left:18.0pt;text-align:justify;line-height: 150%">   

<p class="MsoNormal" style="text-align:justify;line-height:150%"> 2) Translate the words and word combinations into Russian: 

<p class="MsoNormal" style="text-align:justify;line-height:150%"> Have a handshake on a deal

<p class="MsoNormal" style="text-align:justify;line-height:150%"> Rail against somebody

<p class="MsoNormal" style="text-align:justify;line-height:150%"> Leakage

<p class="MsoNormal" style="text-align:justify;line-height:150%"> Plunging share price

<p class="MsoNormal" style="text-align:justify;line-height:150%"> To underwrite a deal

<p class="MsoNormal" style="text-align:justify;line-height:150%"> Be in a deadlock

<p class="MsoNormal" style="text-align:justify;line-height:150%"> To authorize a guarantee

<p class="MsoNormal" style="text-align:justify;line-height:150%"> To plead with

<p class="MsoNormal" style="text-align:justify;line-height:150%"> Be prescriptive

<p class="MsoNormal" style="text-align:justify;line-height:150%"> To get all the pieces lined up

<p class="MsoNormal" style="text-align:justify;line-height:150%"> To be imminent

<p class="MsoNormal" style="text-align:justify;line-height:150%"> Compelling

<p class="MsoNormal" style="text-indent:6.0pt">    3) Fill in the gaps using these words:  <p class="MsoNormal">   …it was just very telling that here are the…1…, who are…2… and had been lauded, …3…their faces, perhaps ashamed. <p class="MsoNormal" style="margin-left:18.0pt">  4) Match the words to produce the proper collocations:  <p class="MsoNormal">           5) Answer the following questions: 
 * 1) Three months earlier, when the press and news channels were full of reports questioning the …4… of Lehman Brothers, Dick Fuld had railed against them.
 * 2) But Dick Fuld thought the constant reporting of Lehman`s   …5… share price was creating a downward …6….
 * 3) There was …7… . Lehman and Barclays had come so far and were so close to a deal, but couldn`t …8… it without a guarantee in place.
 * 4) The tension was …9…, as behind closed doors, Hank Paulson was on the phone to London.
 * 5) And we asked the Secretary whether there were certain things we could do and his statement was, “I`m not going to…10..or …11…the British government.

<p class="MsoNormal"> 1. Do you think it was possible to contain the fallout of the financial market after Lehman`s collapse as Treasury officials thought?

<p class="MsoNormal" style="text-align:justify;line-height:150%"> 2. How did the media reflect the events going at Lehman?

<p class="MsoNormal" style="text-align:justify;line-height:150%"> 3. Was the media responsible for causing problems in a bank?

<p class="MsoNormal"> 4. How can you explain Dick Fuld`s hostile attitude towards the media?

<p class="MsoNormal"> 5. Why did Barclays withdraw its offer for Lehman?

<p class="MsoNormal" style="text-align:justify;line-height:150%"> 6. Who was the knight in shining amour for Lehman?

<p class="MsoNormal" style="text-align:justify;line-height:150%"> 7. What were the reasons for Lehman’s bankruptcy?

<p class="MsoNormal" style="text-align:justify;line-height:150%"> 8. Was Lehman`s demise inevitable?

<h3 class="MsoNormal">

<p class="MsoNormal" style="margin-left:18.0pt">                                               PART 5                

<p class="MsoNormal">

<p class="MsoNormal">http://www.youtube.com/watch?v=L4gqzRePtes

<p class="MsoNormal"> While viewing 

<p class="MsoNormal"> 1) Identify English equivalents for the following: 

<p class="MsoNormal">       1. Нужно было принять реальность, и реакция на это была совершенно разной.

<p class="MsoNormal">      2. Мы ждем окончательного слова по поводу судьбы 158-летней компании братьев

<p class="MsoNormal">          Lehman.

<p class="MsoNormal">      3. Может ли главнокомандующий справиться там, где провалились   банкиры?

<p class="MsoNormal">      4. Была надежда, что мы сможем достать президента и, обойдя Хэнка Полсона,

<p class="MsoNormal">             передадим сообщение о потенциальном разрушении мировой экономики, которую

<p class="MsoNormal">             вызовет Lehman, напрямую президенту.

<p class="MsoNormal">      5. Dick Fuld и совету директоров оставалось только последнее дело – выпустить

<p class="MsoNormal">          резолюцию о ликвидации банка.

<p class="MsoNormal" style="margin-left:18.0pt">6. Суть операций Lehman по всему миру была чрезвычайно сложной, и немногие

<p class="MsoNormal" style="margin-left:18.0pt">      действительно понимали, как она работает.

<p class="MsoNormal" style="margin-left:18.0pt">7. Уровень ослабленных активов и безнадежных кредитов в системе был настолько высоким, что даже признанные организации в Америке оказались под ударом.

<p class="MsoNormal" style="margin-left:18.0pt">8. Lehman взаимодействовал с другими организациями таким сложным образом, что случись что-то с одним из них, это окажет влияние на другого.

<p class="MsoNormal" style="text-indent:6.0pt"> 2) Fill in the gaps using these words:  <p class="MsoNormal"> 3)Match the words to produce the proper collocations:  <p class="MsoNormal">   4) Answer the following questions: 
 * 1) There were the lawyers and the accountants, who turned their minds to the practical …1… that now had to be met of organizing the filing and thereafter dealing with the …2…of it.
 * 2) We are a minute from midnight in terms of …3…catastrophe.
 * 3) We are a …4…away from depression.
 * 4) Behind closed doors, a final throw of …5….
 * 5) The President is his cousin but to reach out to the White House …6… is a very stressing situation for everybody.
 * 6) There was just a real horrific …7…feeling in the room of potential …8… and despair.
 * 7) It was the end of an institution which was one of the …9… of Wall Street and here it was, all coming …10…by pressing a…11…on a computer.
 * 8) When it collapsed on the Sunday night, that did send …12…throughout the world because people thought, “If they can go down, who else can go down?’
 * 9) So with the banking world already …13…, panic spread as institutions feared how …14… they might be.

<p class="MsoNormal" style="margin-left:30.0pt"> 1. What was the bank share price at its peak and at the time of its collapse?

<p class="MsoNormal" style="margin-left:30.0pt"> 2. Why did Lehman`s bankruptcy trigger off such devastating repercussions throughout

<p class="MsoNormal" style="margin-left:30.0pt">     the world?

<p class="MsoNormal" style="margin-left:30.0pt"> 3. What problems did Lehman`s downfall reveal?

<p class="MsoNormal" style="margin-left:30.0pt"> 4. Will you comment on the following,” There were certainly people who felt they were

<p class="MsoNormal" style="margin-left:30.0pt">     on the lifeboat, they had something sorted out for themselves. But they weren`t going

<p class="MsoNormal" style="margin-left:30.0pt">     to let anybody else on that lifeboat”.

<p class="MsoNormal">

<p class="MsoNormal" style="margin-left:18.0pt">                                           PART 6 

<p class="MsoNormal" style="margin-left:18.0pt">http://www.youtube.com/watch?v=Ms_tnEe4wFk

<p class="MsoNormal">

<p class="MsoNormal"> While viewing 

<p class="MsoNormal"> 1)  Identify English equivalents for the following:

<p class="MsoNormal" style="margin-left:30.0pt">1. Именно этот кризис привел к серьезной рецессии, которую мы переживаем сейчас.

<p class="MsoNormal" style="margin-left:30.0pt">2. …жаловались, что не могут получить простейшего финансирования, необходимое, чтобы расплатиться с сотрудниками.

<p class="MsoNormal" style="margin-left:30.0pt">3. Под конец торгов в понедельник 700 миллиардов долларов были вымыты из мирового биржевого рынка.

<p class="MsoNormal" style="margin-left:30.0pt">4. Денежные рынки по всему миру были заморожены, потому что падение Lehman разрушило доверие, которое необходимо банкам, чтобы проводить операции кредитования.

<p class="MsoNormal" style="margin-left:30.0pt">5 Я никогда не считал правильным потратить деньги налогоплательщиков на решение проблем Lehman Brothers.

<p class="MsoNormal" style="margin-left:30.0pt">6 Это показатель того, как важно, что мы пытаемся провести реформу.

<p class="MsoNormal">    2) Fill in the gaps using these words:  <p class="MsoNormal">  1…saying they could`t fund themselves, they could`t make their …1… or fund their inventory.

<p class="MsoNormal"> 2 The fall of Lehman Brothers brought the global financial system …2….

<p class="MsoNormal"> 3 I believe that allowing Lehman Brothers to go bankrupt was a …3… mistake.

<p class="MsoNormal"> 4 The amount of money it would have taken, 20 billion, 30 billion, compared to the …4… in value that followed the Lehman bankruptcy and the complete …5… of credit markets, the billions and billions of losses that were experienced in the market …6….

<p class="MsoNormal"> 5 We are still in the …7… of a severe economic crisis …8… and yet we are going to move with …9… regulatory reform, while we are still trying to get …10…back on track.

<p class="MsoNormal"> 6 The former chief executive has been …11…in numerous civil cases which …12…the bank misrepresented and …13…its assets in the months before the collapse.

<p class="MsoNormal"> 7 The bankers …14    so high for so long, they thought they were …15….

<p class="MsoNormal">

<p class="MsoNormal">   3) Match the words to produce the proper collocations:  <p class="MsoNormal" style="margin-left:12.0pt">  4) Answer the following questions: 

<p class="MsoNormal"> 1 What does the following might mean, “ While the credit markets basically shut down two day later…, the real depth of the damage was not seen for weeks or even months”?

<p class="MsoNormal"> 2 What are the examples of so called “a deluge of communication” Lehman had to confront?

<p class="MsoNormal"> 3 What facts exemplify the drastic consequences of the bank collapse?

<p class="MsoNormal"> 4 Why did the US government fail to rescue Lehman Brothers as they did in the case of Bear Stearns lending it 30 billion dollars?

<p class="MsoNormal"> 5 Do you think the government should have bailed out Lehman Brothers?

<p class="MsoNormal"> 6 What advantage did Barclays gain from the situation?

<p class="MsoNormal"> 7 What brought the American giant to its knees?

<p class="MsoNormal">Additional (not obligatory) m ovie :

<p class="MsoNormal"> [http://www.youtube.com/watch?v=RLWIPyQXcRE http :// www. youtube. com / watch ? v = RLWIPyQXcRE]