Lehman Weekend 2008
Lehman weekend (13–15 September 2008) was the disorderly failure of a primary dealer — the moment a housing/credit crunch became a global run on counterparties and money funds.
Definition
After Bear was sold and Fannie/Freddie conservatorship, Lehman could not find a buyer over a weekend and filed. Prime-broker customers, CDS counterparties, and the Reserve Primary Fund (which broke the buck on Lehman paper) transmitted the hit. AIG’s failure the next day was the same week’s second detonator.
Why it matters
It is why ‘let one fail to teach moral hazard’ is not a complete policy when the firm is a node. The GFC entry is the war; this is the battle.
Case
Sunday night filing, Monday gap, Wednesday AIG, Thursday–Friday money-fund panic, TARP the following week. Legal close-outs and safe-harbor fights lasted years.
How to read it
Map prime-broker locks, variation-margin jumps, and money-fund holdings of the name. Those three were the pipes.