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Hello, this is another episode of old newscast, which was our brainwave about what would happen if we did an episode of newscast, but about a day from the recent past.

So here is Monday, September the 15th, 2008, which is the day that the major investment bank Lehman Brothers filed for bankruptcy

in the United States, with its British operations ceasing shortly afterwards. This moment

turbocharged the global financial crisis and caused recessions in many countries around the

world, including in the UK. But as you will hear shortly

in this episode, there had been quite a lot of warning signs for people who were able to see

them at the time. So why did Lehman Brothers collapse? Our economics editor, Faisal Islam, and

Gillian Tech, columnists at the Financial Times, will delve deeper into why on this episode, and they have got

some excellent food-based metaphors that will help to explain. Lehmins were involved in the

subprime mortgage market in America. That was mortgages, home loans, aimed at people who banks

thought weren't guaranteed to meet all their repayments.

And there was also this related thing in the financial markets called a CDO,

a collateralised debt obligation, which we will explain a bit later.

Now, when the number of Americans started defaulting on those mortgages and just not meeting their repayments,

people began to question the value of that whole kind of investment and all the other investments that were linked to it.

And that caused a massive loss of confidence.

And because Lehman Brothers basically didn't have enough money to ride that out, they either had to find a buyer, and there wasn't one, or get bailed out by the American government who said no.

And the collapse of Levin Brothers in America came almost a year to the day after a run on the British Bank Northern Rock when people were queuing up for hours

and hours and hours to withdraw their money from Northern Rock cash machines because they thought

it was going to go bust too. And by that point, the British Chancellor Alistaird Arling had

nationalised Northern Rock. And as we know from discussions about the British steel industry,

...