The BofA $136B Dynamite Stick

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The Impact of Debt

Lehman Brothers, in 2007, had a leverage ratio of about 33 to 1,73 meaning that it had about $1 in capital for every $33 in financial positions that it held. This meant that if there was just a 3 to 4 percent decline in the value of its portfolio, Lehman Brothers would have negative equity and would potentially face bankruptcy.

Nate Silver • The Signal and the Noise: Why So Many Predictions Fail-but Some Don't

One of the major contributing factors of the recession of 2008–9 was the use of enormous amounts of Leverage by investment banks. It wasn’t uncommon for banks to Leverage their investments by a factor of thirty or forty. Millions (or billions) of dollars were made or lost when the value of a particular stock went up or down by a single percentage p

Josh Kaufman • The Personal MBA: A World-Class Business Education in a Single Volume

In effect, SVB didn’t have the technological infrastructure to handle the influx of deposits that came into it during the pandemic, nor the investment skill to manage all that new money. It took what appeared to be a safe route of investing in long-dated Treasuries but failed to recognize that in a rising interest rate environment they would lose v... See more

Confessions of a Former SVB Executive

Lehman was not alone in being highly levered: the leverage ratio for other major U.S. banks was about 30 and had been increasing steadily in the run-up to the financial crisis.75 Although historical data on leverage ratios for U.S. banks is spotty, an analysis by the Bank of England on United Kingdom banks suggests that the overall degree of levera