Tuesday, September 15, 2009

A Year After Lehman's Collapse, Banks Try New Path


Posted By Pete Hill


It was just a year ago that Lehman Bros. filed for bankruptcy. The claim for bankruptcy by Lehman Bros. was said to be an important factor in the upending of the financial world. In just one year the banks have experienced financial terror and now record profits. If one thing is for sure, it is that the financial system is vital to the operation of the economy.
It is said that the move to let Lehman Bros. go bust was the single biggest mistake made during the crisis. Although nobody realized it at the time, Lehman Bros. had to die in order to have the rest of Wall Street to survive.
One year later, the banking system is back on track. Some banks like J.P. Morgan Chase and Bank of America have recorded record profits. Although more regulations could mean that banks earn fewer profits, it will mean that the next time around, they are more stable. Banks will have less to put to work because they will be required to hold more capital so they do not weaken again.
Although the collapse of Lehman Bros. sent the economy into frenzy, it may have been the best thing that happened to the financial systems. It will allow them to live through the recession and come out stronger.


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