Pool street. Two thousand. The wells Financial Sense up and tons of hedge funds and Investment Banks posting staggering returns times had never been used so good banks are making an enormous amount of profits there is actually a very nice graph that shows what was happening to that growth rate off all other industries combined and what was happening to the brought straight off the Banking Industry surpassing vast majority of the industry its become known to actually be coming everybody was questioning horror these banks making so much money. And to assume its a call well whats on wall street unlike any banker at the time he lived extravagantly i used to be a bank of america between two thousand and two thousand. Six we would go out for dinner and those dinners were really cost anywhere from a thousand dollars to seven thousand dollars so this gives you a sense off how much money the banks were making everybody wants to have a big house and a big car and they want to show off to the other guy so you can imagine the enormous profits and no accountability the kinds of the amounts of money that bankers operate with are so astronomical that sometimes even they themselves write the analysts and the traders and the brokers to them it becomes just numbers. Wall street players thrived on these numbers and some of the biggest money makers on this block the Investment Bankers the golden boys of the industry. All investment back were very aggressive players. Rightfully so all these guys were living the good life they were known to make money for investors and shareholders. And the good times were not just rolling in the us in asia the economy was beginning to boom after the nine hundred ninety seven financial crash and wall street titans wanted a piece of the action. And singapore was becoming an especially attractive asian destination because growing banking well there was a bank in the pronunciation of singapore which meant that more foreign banks such as the chances to bank for instance were greater Market Participation in the Retail Sector so the commercial banks in singapore were all facing essentially great competition from one another in competing for that Customer Base and you know when you. Talk to American Investment banks piled in to take advantage of the new opportunities Merrill LynchGoldman SachsMorgan Stanley and also. Lehman brothers the oldest of the lost and st for the strong culture of its u. S. Operations Lehman Brothers was a significant i mean horton player in the twin towers in the us in the investment Banking Industry at that time it was number for me money also was one of the most aggressive players in the industry people kids i mean its students would love to go and work for the money i mean thats what the prime job for them. Is a commodity joint Lehman Brothers in two thousand and six as a Vice President in the mergers and Acquisitions Group in new york the farm was a behind civic success lehman had a very strong culture very a lot of pride. In every employee in working for Lehman Brothers there was almost a lot of confidence that lehman could take on the bigger competitors and we. Found it in one thousand and fifty lehman was the remarkable survive the Great Depression two world wars and it was still making money over the years lehmans bankers had gained a reputation for being the toughest of them around. The world. Now is a terrific time to be joining Lehman Brothers ive been here thirty years like you think of a better time for you to forge changes and opportunities that are going on you. Once you were there nothing was really. In boston to achieve you had a lot of feed from the from about a fifteen year old manager is going to feed from your peers and a lot of faith in their clients confidence in you know work. No one really fear of taking on competition with taking on tough transactions whereas ive seen in other places where people would just walk away from a battle without giving into shock. But in two thousand and six no one on wall street was walking away from an exciting new Market Opportunity the federal government had lowered Interest Rates which allowed both banks and consumers to borrow more money are you looking to hire we can insure only you can the winning streak we make the mortgage process do you think and understand. Americans were also encouraged to own a house and this drove the Housing Demand as house prices kept going up it seemed a one well bet to making millions of working on what was happening to mortgages or bank of america we were actually seeing Aggressive Growth in the mortgage industry i mean we were lending going looking for borrowers this was a new approach energy that was created because of the role of security i think. Securitization was the brainchild of the new generation of bankers it started with homeowners the common man on the streets each month they paid mortgages to mortgage lenders wanting to make more money the lenders would then sell the mortgages to Investment Banks the mortgage contracts for them bundled by these Investment Banks like Lehman Brothers with other loans to create a new Financial Products called collateralized debt obligation all c. D. O. Unknown to most homeowners their mortgage payments that were packaged with other loans for them sold and traded to institutional buyers all over the globe securitization became the tool that turned mortgage payments into even more wealth for financial empires business triples over six years in two thousand and six alone the top ten Investment Bankers sold one point five trillion u. S. Dollars worth of Mortgage Securities and even for the regulators this seemed like the perfect way for more people to live the American Dream of owning their own home regulators saw the positive benefits of actually security. Because they were they saw that credit was being made available to a Wider Population or you can think about credit was being democratized so nobody actually envision that there could be negative effects. The Worlds Largest banks were now making mindblowing amounts of money bankers were hooked to the profits made and craved even more next stop was selling their Investment Products to Asian Countries like hong kong and singapore. Almost all the banks were pushing different kinds of products to trying to attract customers these products was seen as very attractive because they were so it was a promise that it has quite a high reading interest of about five percent. In asia products like high notes pinnacle notes and many bonds hit the markets. Where mr tun walks into his local bank with fifty thousand u. S. Dollars and the intention of renewing his savings accounts he was offered a chance to join the moneymaking party. We have protected his identity upon his request to see what this money was to the suits men in charge. Just a cigar as food was what the have you got millions in obama about more than five percent interest as well as the group who are the check off one hundred thousand to be used by you in the morning your community is the envy of the promise that is the greatest the more. Like so many other investors mr tung fully trusted his bank. But what he didnt know was that the products here to invest it in was directly linked to top american banks like Lehman Brothers and Merrill Lynch. Many of the Investment Banks in the u. S. Were actually involved in the structuring and the sale of these structured products and therefore what was happening you know quite far away in the United States actually had very real impact on the every day every two investors who were here in asia. This was to prove problematic those top american banks were by now completely entangles in the u. S. Mortgage markets but fundamental cracks have begun to appear in the system not all homeowners could actually make their mortgage payments. Chris roebuck is a british economist he was advised to major global banks and held senior roles at u. B. S. And h. S. B. C. It was possible for you to get a mortgage not by presenting any evidence of your earnings or talk but by mewing telling the person who was offering you the mortgage how much you were earning so there was no evidence actually. The any of the people had mortgages could actually afford them. But to Investment Bankers these people were making the money and banks had even extended their loans to what would term to stop prime borrowers things of borrowers who would not get credit in normal types but the banks realized that so much money can actually go out and they have credit to these bottles. On a larger problem was brewing and no one was anticipating it. In any society there are going to be some people who lose their jobs and compact but it was practice because the banks made a lot of money out of it because they thought it was a bottomless pit. Everybody rather wanted to ignore the reality that the whole thing might blow up in their face. But talk just soo much a girl who was still working at bank of america could not ignore that reality he began to feel like it was not the place to be in two thousand and six i could already sense that the banks were making lots and lots of longs that didnt make any sense to me i felt like it was time to meet this wall streets it was squarely in that blind spot. By the end of two thousand and six pressures were felt across the Mortgage Markets as housing prices in the u. S. Started falling dramatically. It was the beginning of the end from that point of view which to some degree it was a house of cards. Lehman brothers americas oldest Investment Bank was growing fast with offices and merging all around the world and employing over twenty five thousand people by two thousand and seven its revenues totaled nineteen billion u. S. Dollars it was becoming a powerhouse Investment Bank standing on its own being very independent and really clocking away very good results in all of its franchise examinee was number one number two in the u. S. Equities was doing well and these were traditionally not lehmans in a strong suite but they were really catching up and beating the stronger players in that market for everyone remember this was a trick. Remember the success could be attributed to one man his name is richard fuld. If you. Are going to mr fuld the chairman and chief executive officer of Lehman Brothers are pleased that youre considering a career divestment thank you for was a very strong leader if you take a large Investment Banks there are anywhere between twenty five to you know hundred thousand employees we will fly. Im employed in these large institutions who would not nor the name of the seal. It would be fair to say that every employee at Lehman Brothers knew who the c. E. O. Was and that you know he was very passionate in a leader about the farmer about its franchise about its team. Began his colorful career at Lehman Brothers in the one nine hundred sixty nine on its Trading Floor but the feisty character quickly rose through the ranks and became the firms chief executive in one nine hundred ninety three. By two thousand and five he was taking home more than thirty four million u. S. Dollars in pay and bonuses and this man lived and breathed Lehman Brothers. Most ninety five percent of his wealth was in human stock saw people have faith in his leadership whatever he was doing for the from for the shareholders of the from had a very direct impact on his own personal wealth and future he had a lot of vested interest in making sure the human body did well. As part of this false looks the east to further his moneymaking aspirations in two thousand and seven asia was lehmans highest growth region it took in more than three point one billion u. S. Dollars in revenue having toppled this in just two years and many is the last largest Investment Bank in the rest we had a large presence in singapore in fact we experienced record volumes in two thousand and seven and there was an environment of confidence easy credit and people were optimistic. And this optimism filtered down to consumers and investors like mr ton who sees the opportunity to build a pot of savings. Per person to save money for. When the money grow in the cypriot. This is simple as brings. Who bought the money and then more this why would they. Trust the bag. Those investors did not know or the underlying risk in these securities they didnt know what they were holding what they were links upright mortgages what they were doing prime mortgages they were packaging all these things together under selling them as prime securities. These packaged securities continued making millions for financial giants but some key players from lehmans global team proved out. Anthony fry was the head of Lehman Brothers in the u. K. I think they were in a position where they really believed they were the people in charge of the whole world. They were winning everyone else for losing. A fry hatch thirty five years of Investment Banking experience. Even what place really with Margaret Thatcher thats even then his knowledge and expertise would challenge to take full head stay at his u. S. Operations on a completely different route the firm baris more money than any other bank on wall street was in a position where i was for sure that i could say we wont do that. Im gay were already talked to me and saying youre trying to stop this we want to do x. Ones that. We have a fundamental disagreement routes between them in america myself working here in england and it got very difficult. Lehmans chief executive was not letting anyone get in the way of his vision and now this is a guy that to some degree is on a personal mission hes a grandiose wall street he has his own little shop you know hes been there long enough he doesnt want anybody getting in the way its his focus his success. The truth was that he controlled everything and it was very kind of hurts if you decided to do it someone mustnt do in what you want them to do it for you. But if they were loyal to his vision then he would reward them handsomely and the salaries incentivize them to take bigger risks. The remuneration the pay the people getting you going situation where these people were affected between piii micahs much money as quickly as possible so the psychology is if this is a safe deal that only makes a little bit of money pool this is a regime that makes an awful lot of money we are so clever that we can control the rich over top of the food. In the final months of two thousand and seven cracks in the u. S. Housing market deepens property prices drop so much some houses will worth less than the mortgage itself and now homeowners who could never actually afford a mortgage to begin with struggled to pay so many simply stopped paying the senior looks such for disaster but the brushes minds on wall street still felt they had it under control. The. Defaults caused huge problems but decades of success made banks believe they could ride out this storm the reality was they lacked the reserves to cope with those losses and early two thousand and eight the subprime crisis a claimed its first victim best earns americas fifth largest Investment Bank. The farm was hit too hard and raised his white flag of bailouts by the u. S. Federal reserve and j. P. Morgan chase was more than thirty. Billion u. S. Dollars pulled the bank back from the brink. But the crisis was far from over. Wall streets money making machines were crumbling when i went to the office and i heard the bear stearns was sold to j. P. Morgan i dont very very cheap price it was shocking it was astonishing it was unbelievable how this happened how quickly thats when we realized that these Investment Banks actually may have taken excessive risks and now these interests are actually coming up and coming back to bite it was a watershed event rights or anyone stop trying to buy forty eight percent that sent a signal that there was more to car suddenly of the entire sort of stock market back a bit People Investment portfolio there were also i believe you know in the reds. Dr soon which aggarwal who was formerly working at bank of america had now become a senior financial economist at the chicago Federal Reserve and regulators like him what worries so immediately at the Federal Reserve and we started looking at what are the other Investment Banks story what are they up for for us why could this happen to them as well and of concern but weve had years because we are not regulating them we have no idea what these