New York Magazine

Steve Fishman, "Burning Down His House", New York Magazine, 12.08.2008, 32-33.

Leverage was the way to supercharge revenues. At one point, it was said that Lehman had borrowed $32 for every $1 in its coffers. By comparison, at Merrill Lynch and Goldman Sachs, the ratio was roughly 25 to one. For all of the firms, a small dip in the value of collateral could prove calamitous.

Citigroup and Merrill Lynch would both announce significant first-quarter losses - Merrill at $1.97b, Citigroup at $5.1b. Lehman coolly posted a profit of $489m. It was smaller than usual and included some 'hard-to-repeat gains,' as The Wall Street Journal put it. Still, it was Lehman's 55th consecutive profitable quarter.

One hedge-fund owner, David Einhorn, later asserted that Lehman had overvalued important assets, in effect fudging its books. In fact, many of Lehman's losses were 'backloaded', already lurking on its books.