Open Access (free)
A Crisis of Value
Author: Oonagh McDonald

This book explains the fundamental causes of the bank's failure, including the inadequacy of the regulatory and supervisory framework. For some, it was the repeal of the Glass-Steagall Act that was the overriding cause, not just of the collapse of Lehman Brothers, but of the financial crisis as a whole. The book argues that the cause is partly to be found both in weak and ineffective regulation and also in a programme of regulation and supervision that was simply not fit for the purpose. Lehman Brothers' long history began with three brothers, immigrants from Germany, who sold selling groceries and dry goods to local cotton farmers. Dick Fuld, the chairman and CEO, and his senior management, ignored the increased risks, choosing to rely on over-valuations of the firm's assets. The book examines the regulation of the Big Five investment banks in the context of the changes which took place in the structure of banking after the repeal of the Glass-Steagall Act. It describes the introduction of the European Union's Consolidated Supervision Directive in 2004. The book examines the whole issue of valuing Lehman's assets and details the regulations covering appraisals and valuations of real estate, applicable at the time and to consider Lehman's approach in the light of these regulations. It argues that that the valuation of Lehman's real estate assets was problematic to say the least, as the regulators did not require the investment banks to adopt a recognized methodology of valuation, and that Lehman's own methods were flawed.

Oonagh McDonald

4 Regulating the ‘Big Five’ This chapter will examine the regulation of the Big Five investment banks in the context of the changes which took place in the structure of banking after the repeal of the Glass-Steagall Act and the introduction of the European Union's Consolidated Supervision Directive in 2004. Immediately after the financial crisis, various reasons were found for the failure of so many banks, and indeed for the collapse of Lehman Brothers. This is despite the obvious fact that the major investment banks were

in Lehman Brothers
Open Access (free)
Environmental justice and citizen science in a post-truth age
Editors: Thom Davies and Alice Mah

This book examines the relationship between environmental justice and citizen science, focusing on enduring issues and new challenges in a post-truth age. Debates over science, facts, and values have always been pivotal within environmental justice struggles. For decades, environmental justice activists have campaigned against the misuses of science, while at the same time engaging in community-led citizen science. However, post-truth politics has threatened science itself. This book makes the case for the importance of science, knowledge, and data that are produced by and for ordinary people living with environmental risks and hazards. The international, interdisciplinary contributions range from grassroots environmental justice struggles in American hog country and contaminated indigenous communities, to local environmental controversies in Spain and China, to questions about “knowledge justice,” citizenship, participation, and data in citizen science surrounding toxicity. The book features inspiring studies of community-based participatory environmental health and justice research; different ways of sensing, witnessing, and interpreting environmental injustice; political strategies for seeking environmental justice; and ways of expanding the concepts and forms of engagement of citizen science around the world. While the book will be of critical interest to specialists in social and environmental sciences, it will also be accessible to graduate and postgraduate audiences. More broadly, the book will appeal to members of the public interested in social justice issues, as well as community members who are thinking about participating in citizen science and activism. Toxic Truths includes distinguished contributing authors in the field of environmental justice, alongside cutting-edge research from emerging scholars and community activists.

Open Access (free)
Crisis, reform and recovery
Shalendra D. Sharma

Indonesia: crisis, reform and recovery 3 Indonesia: crisis, reform and recovery In Indonesia, state-owned banking gave way to a system where anyone with $1 million or so could open a bank (Little 1997, 10). In mid-1998, a World Bank study (1998) grimly noted that “Indonesia is in deep economic crisis. A country that achieved decades of rapid growth, stability, and poverty reduction is now near economic collapse . . . no country in recent history, let alone one the size of Indonesia, has ever suffered such a dramatic reversal of fortune.” There is bitter irony

in The Asian financial crisis
Why China survived the financial crisis
Shalendra D. Sharma

worst banking system in Asia.”20 Sorely lacking in professional competence and institutional autonomy, burdened with balance-sheets that conceal many worthless assets, undercapitalized by international standards, unable to offer a wide range of services and products, and subject to political interference, it is arguably the 259 The Asian financial crisis Achilles’ heel of the entire economy. While the central reformers have instituted some important measures to create the institutional structures of a modern financial system, much more financial deepening is necessary

in The Asian financial crisis
Oonagh McDonald

Frederick Ehrman, who had been at Lehman Brothers since World War II. He was replaced by Peter Peterson, a former US Secretary of Commerce in the Nixon administration, who had little experience of banking, still less as a trader. Nevertheless, he turned the company around, and in the last five years of his stewardship the company became extremely profitable. His chief problem was Lew Glucksman, head of trading, who worked long hours and regarded the bankers (as opposed to the traders) with disdain. Peterson tried to keep Glucksman on-side but neither the additional

in Lehman Brothers
Grassroots exceptionalism in humanitarian memoir
Emily Bauman

-systematically. Even as humanitarian authority presupposes structured reasoning and methodical organisation, its mandate is still viewed through the lens of personal impulse and independence. Improvising in the midst of chaos, testing the limits of one’s endurance and ingenuity, following gut instinct even or especially when it flouts the rules: these are the core stories that acquaint the industry with its

in Global humanitarianism and media culture
Open Access (free)
The evolving international financial architecture
Shalendra D. Sharma

the lead. Following on the request by G-7 leaders at the Lyons Summit in 1996, the Basel Committee developed “25 Core Principles for Effective Banking Supervision.” These principles cover seven broad headings, including preconditions for effective supervision, licensing and structure, prudential regulations, methods of ongoing supervision, information requirements, powers of supervision and cross-border banking (Basel Committee 1997; 1999; 1999a). Comparable principles were subsequently developed for securities supervision by the International Organization of

in The Asian financial crisis
Open Access (free)
Crisis, reform and recovery
Shalendra D. Sharma

development of a commercially-oriented and sound banking system, besides creating moral hazard. Within banks, lending decisions tended to be highly centralized, and the internal risk-control structures as well as credit analysis skills and procedures did not mature fully. As a result, credit decisions tended to rely on collateral and inter-company guarantees, as well as informal government guidance, rather than projected cash flows. Loan review processes and management information systems were rudimentary. Thus Balino and Ubide (1999, 16) succinctly note that “although

in The Asian financial crisis
Open Access (free)
Issues, debates and an overview of the crisis
Shalendra D. Sharma

on the exchange rates. The subsequent pages will show that weaknesses in the private sector (in the banking, financial and corporate sectors) were at the heart of the Asian crisis. Specifically, weak corporate structures (where the focus too often was on increasing scale and market share rather than on economic returns), weak regulation of the financial system, connected and directed lending, and implicit and explicit guarantees of financial institution liabilities created an unprecedented degree of moral hazard. The banking sectors in the crisis-hit countries were

in The Asian financial crisis