JPMorgan, Citigroup Helped Cause Lehman’s Collapse

Bloomberg reports:

JPMorgan Chase & Co. and Citigroup Inc. helped cause the illiquidity that led to the collapse of Lehman Brothers Holding Inc., the bankrupt bank’s examiner said today in a report filed in Manhattan federal court.

Lehman tumbled into its $639 billion bankruptcy, the biggest in U.S. history, because it didn’t have enough liquidity and lost the confidence of its counterparties, according to a 2,200-page report from Anton Valukas, the U.S. Trustee-appointed examiner.

By changing guarantee agreements and making new demands for collateral, JPMorgan and Citigroup helped to precipitate the liquidity crisis that doomed Lehman, Valukas said.

“The demands for collateral by Lehman’s lenders had direct impact on Lehman’s liquidity pool,” he said. “Lehman’s available liquidity is central to the question of why Lehman failed.”

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