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15 Sep, 2010 22:52

US marks two years since Lehman Brothers collapse

It’s the anniversary of the largest bankruptcy is US history. Lehman Brothers, holding $600 billion dollars in assets, fell to its knees and became the tipping point for the financial crisis.

Deputy editor in chief of The Business Insider, Joe Weisenthal said, "The fact that it failed actually really shook people's confidence in the financial system as a whole."

In panic mode, the US stock market went through the biggest points fall in a single day since the attacks on 9/11.

"When the Feds let Lehman go under, it was sort of a crescendo and at the same time it triggered off a number of other events – you had ripples through the global financial system – from here to Europe," said economist Michael Norman.

While most Americans went broke, American CEOs did not.

Howard Sirota, a class action lawyer with over 30 years of experience in the field is outraged, “Other than Bernie Madoff, where do you see anyone getting a hundred and fifty year sentence?” he asked.

Apart from losing their dignity and Wall Street credibility, most CEOs went unpunished.

Economist Richard Wolff questioned whether the risk-taking behavior on Wall Street has changed.

"Are they more frightened and worried? Yes. Are they more careful? Yes. Can they afford not to take risks again? No," he said.

Living the highlife on Wall Street continues.

The enforcement division and the crooks ride up and down the same elevator today, and as we speak, they are all exiting to go to Cipriani’s for blinis,” said Sirota.

For over a year now unemployment has remained at more than 9.5 percent. However, some analysts say that number may be closer to 20 percent. And it does not stop there.

The housing crisis forced millions of Americans out onto the streets. In New York alone homelessness has gone up a staggering 50 percent.

"Lehman was a symbol of that and it accelerated the panic, but what really hurt America was the focusing on housing and the subsequent collapse of that," said Weisenthal.

But Sirota, who has been suing corporations for fraud for much of his career said, what actually hurt the US is much trickier.

The difference between arithmetic and accounting is that in accounting the result can be any number you want it to be. […] Lehman knew what it was doing, but more importantly, the US government knew what it was doing,” He said.

Many are still skeptical the worst is over.

Among them is economist Richard Wolff, who said; "People are not buying, because they are too insecure about the future. Therefore, there is no market for goods, so people are being laid off, which frightens them even further. You are in this classic downward spiral, which puts the American economy in its worst condition that I have seen in my lifetime, and I have been around a long time."

Two years after the failure an inquiry into who is to blame for Lehman’s collapse is ongoing, but few expect real results.

Countless amounts of taxpayer dollars have been poured into the system to bail out corporations through the financial crisis, but not Lehman Brothers. Considered by the US government as not too-big-to-fail, it collapsed.

Does this mean a few hard-earned dollars were saved by the people? Not exactly; helping the US Treasury to overcome the losses from the failure continues to pull taxpayer dollars.

The US public continues its traditional roll of footing the bill for the mistakes in the country.

Economist and professor Max Fraad Wolff from The New School in New York City said industry changes have taken place since the collapse of Lehman Brothers; many groups and committees have met, rules have been adopted, but the process of change continues.

It’s a long slow process to win back general public faith and belief, both in the markets, the financial sector and also in the regulators, who quite frankly were often asleep at the wheel,” said Wolff.

He argued that positive changes are taking place via US government and international bodies who are analyzing what occurred and altering laws and regulations moving forward. However, he said that governments tend to regulate areas of the market they operate less in, causing more harm than good as they regulate others instead of themselves.