Crisis Management and Resolution

Giovanni Bassani and Maurizio Trapanese

This article was first published as a chapter in Basel III and Beyond, by Risk Books.

On the occasion of the second anniversary of the bankruptcy of Lehman Brothers, a Financial Times columnist compared the date of September 15, 2008 (9/15 in American jargon), to the most eventful date in the recent history of mankind: September 11, 2001 (for ever 9/11). The main thrust of the article (Rachman 2010) was that the consequences of the collapse of Lehman Brothers Inc. will have a more lasting impact on the world’s geopolitical framework than the infamous terrorist attacks in Manhattan. In the end, the columnist argued, while the 9/11 attacks did not shake the US’s role as the world’s only superpower, the global financial crisis will probably be remembered for ever as the beginning of the end of American global economic and financial dominance. Be this as it may, it is nonetheless unquestionable that the importance and the impact of the failure of Lehman Brothers on the global economy in general and global financial markets in particular cannot be overstated.

The Lehman insolvency represents the classic (and incredibly disruptive) coordination failure scenario between national

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