Warren Buffett. AP Images
Warren Buffett had at most three chances to save Lehman Brothers bankruptcy.
After analyzing the bank in crisis, the investor decided that it was too risky for him to assist.
The collapse of Lehman Brothers was a major catalyst for the global financial crises.
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Warren Buffett had at most three opportunities to rescue Lehman Brothers prior to the collapse of the investment bank in September 2008. This fueled the global financial crisis. He declined the first two invitations from Berkshire Hathaway CEO Warren Buffett, a billionaire investor. A technology mix-up prevented him from receiving the third.
Buffett repeatedly stressed the gravity of the 2008 fall situation, in which investors pulled billions out of money-market funds and credit markets were frozen.
Buffett stated that it was "as close as a total meltdown within the financial system as possible," at Berkshire's 2008 shareholder meetings. "We were really looking into the abyss that time."
Vice News interviewed him in 2018 about his economic Pearl Harbor, a decade after the financial crises began.
CNBC reported that Richard Fuld, CEO of Lehman Brothers, first called Buffett on March 8, 2008 to suggest that Berkshire invest several billion dollars in the bank's ailing business.
Buffett was open to the idea and spent a night in his office poring through hundreds of pages of Lehman Financial Reports. He quickly compiled a long list of red flags and began to write them down.
Buffett stated to The Wall Street Journal that there was "clearly a lot of trouble" in 2018.
CNBC's investor said that he saw "a lot of things" that made him very concerned about their financial situation and what would happen to them if Wall Street was not in control.
Reuters reported that Lehman executive tried again to make it work in the weeks leading up to the bank's collapse. Buffett declined the offer and called the idea of investing unrealistic.
In September 2008, Bob Diamond, the president of Barclays at the time called Buffett. Lehman was being bought by a British bank and the British bank president Bob Diamond called Buffett in September 2008.
CNBC learned that Buffett was at the hotel at the time and asked Diamond for details. The Barclays boss, however, was working out of the Federal Reserve so couldn't find any fax machines, so he left Buffett an audio message. It was not noticed by the investor, who only discovered it when his daughter saw it and played it for her.
CNBC reported that Buffett said that he could not have given Diamond the broad guarantee he wanted.
He said that "it would have been an endless exposure that wouldn’t have made sense," especially with "the whole world falling apart."
Buffett rejected the notion that Berkshire could have saved Lehman if he had the money. He stated, "I don't believe the world would have changed."
Buffett denied Lehman but noted in his 2010 shareholder letter, that Berkshire had deployed $16 billion within the first 25 days following the filing of bankruptcy by the bank on September 15, 2008. It made crucial investments in Goldman Sachs and General Electric as well as other struggling companies.
