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Lehman Brothers is not the largest investment bank in the United States. Why did it fall first?
The biggest reason is that its average leverage is as high as 40 times, which is simply an explosion! The average leverage of Goldman Sachs and Morgan Stanley is below 20, and the risk is much lower than that of Lehman Brothers.

Because American investment banks can't absorb savings and loans, they are not directly affected by non-performing loans of subprime loans. Theoretically, as long as the leverage exceeds 10 times, there will be liquidity shortage. When the market is good, the income of highly leveraged financial derivatives will be magnified many times, and the liquidity problem is not serious. But once the market enters a downturn, high leverage will also amplify losses. Lehman's leverage ratio is too high, so the losses are relatively too much, even the US government can't help it.

A very important reason for Lehman's final bankruptcy is that its liquidity shortage was exposed very slowly. When it found that the problem was serious, it found that its reserve liquidity had been slowly consumed. On the contrary, the problems of Morgan and Goldman Sachs were exposed very quickly so that they could use their own funds to remedy them as soon as possible. So the effect is much better than Lehman.

On the issue of leverage, there are the following comparisons: the value of domestic stock market without margin trading is less than 1. The average leverage of the futures market is about 6-7 times. The applicable value of stock index futures is 10 to 12 times. The leverage effect of foreign exchange products can sometimes be as high as 400 times. The maximum leverage allowed for China Bank's foreign exchange margin trading is 20 times.