Lehman faced an unprecedented loss due to the continuing subprime mortgage crisis in 2008. According to Jenny Anderson and Erick Dash’s article, “For Lehman More Cuts and Anxiety”, Lehman's loss was a result of having held on to large positions in subprime and other lower-rated mortgage tranches when securitizing the underlying mortgages. During the years of the housing boom Lehman Brothers was increasing its revenue. They were increasing their profits from all of the home mortgages. Leman Brothers acquired subprime mortgage lenders. Between the year 2004 and 2006 Leman Brothers real estate business enabled revenues in the capital market to increase by 56%, giving the firm a securitized 146$ billion in mortgages in 2006. In 2007 the firm reported a net income of a record 4.2 billion on revenue of 19.3 billion (Case study p.1). Everything was going well for Lehman Brothers between 2005 and 2007. In beginning of 2007 Lehman’s stock prices had reached a high record. Unfortunately soon after that subprime mortgages began to default. Stocks for Lehman Brothers dropped dramatically after the default in subprime loans and from the start of the crisis. During the default in the subprime loans, Lehman Brother’s closed its subprime lender, eliminating 1,200 jobs in 23 of their locations. During the crisis in 2007 Lehman Brother’s leverage ratio jumped to 31 from 24 in 2004 (Case Study p.2). The leverage ratio shows how much more risky the company became. After Bear Stearns (second largest underwriter of mortgage backed securities) nearly collapsed on March 17, 2008 Lehman Brother’s suffered a 48% loss in their shares and it was expected that they might fail as well (Case Study p.3). In Lehman’s second quarter they announced a that they suffered a 2.8 billion dollar loss. They also announced that they had raised their liquidity pool, decreased their gross assets and reduced its exposure to residential and commercial mortgages by 20%. Reducing the number of