Lehman Brothers Holding Inc and the United States banking policies From the early 19th century to the II World War

Lehman Brothers Holdings Inc is known to the most as one of the iconic symbols of the 2008 financial crisis that shocked the United States and the world, being the only major American bank to actually vanish in just a few days leaving a legacy of huge debts, “some 25,000 employees left asking: Now what?" and widespread disbelief. Before being generally perceived as the representation of one of the darkest periods for the global economy, Lehman Brothers was among the most important investment banks worldwide - with a market capitalization of nearly $60 billion in 2007 - and one of the greatest examples of «the American dream» , a story of raising success and power that lasted more than a century and a half. Lehman Brothers finds its origins in 1844 when it was just a general store in Montgomery (AL) founded by one of the millions of families emigrating from Europe in the first decades of the 19th century. From this humble start, the family-run business developed into the fourth-biggest bank in the United States. During its long existence before its unpredictable collapse in 2008, Lehman Brothers survived many historical, political, technological and social transformations. On many occasions, it previewed these changes and managed to expand its power and economic influence thanks to them. Despite this long-lasting and successful expansion, Lehman Brothers Holdings Inc’s empire had to surrender to the subprime crisis and on the 15th of September 2008 was forced to file for bankruptcy with enormous side effects on the market and on many correlated firms. To this day, it is the biggest bankruptcy in American history, with more than $639 billion of liquidated assets. Being such a historic and dramatic event, the analysis of Lehman Brothers’ bankruptcy is the subject of many academic and professional research papers and books with the most different approaches and perspectives. However, this paper will not be focused on the sudden ending of this important American bank but on its transformation alongside the American and global economic and legal development in the banking environment. Particular attention will be put on the evolution of banking policies in the United States. Also, the paper will analyse the Glass-Steagall Act to unveil its consequences both for Lehman Brothers and the US banking structure.