Video transcript: Ten years on: How Lehman changed the world

Transcript

Reporter:

This was the city this morning, a financial crisis unfolding on the trading floors as shares headed downwards. The collapse of the investment bank, Lehman Brothers, began a series of job losses, the implications of the Lehman collapse go far beyond the city.

Tony Lomas:

But what it underlines for me is the massive importance of market confidence.

Looking back at the Lehman collapse 10 years later, it's quite clear that this was a pivotal point in time, and it was a pivotal assignment for the firm. Everybody wanted to know what was happening at Lehman and what would happen next.

Helen Shillito:

It's easy to think a decade on, and well of course we knew it would all work out, but at that time people weren't certain.

Reporter:

Up to 5000 jobs are at risk, the bewildered administrators aren't sure how and if a 75-million-pound wage bill due to be paid on Friday can be paid.

Dan Schwarzmann:

Just to put that to context, the biggest failure ever, before the stock market opened at 8 o'clock, Lehman had to be put into administration.

Tony Bugg:

Lehman was the third largest broker dealer for the UK Stock Exchange, and a huge amount of value were stuck in the system.

Tony Lomas:

Because what was happening at Lehman was playing out and affecting what was happening elsewhere in the financial services market.

Helen Shillito:

This wasn't local. This was far reaching, and this was global. You hear the stories told again and again, but no one believed that it would actually happen.

Tony Bugg:

People weren't panicking, but they were in a complete unknown territory.

Tony Lomas:

It caused the world to wake up, seriously wake up, as of what was going on in the financial markets.

Dan Schwarzmann:

There was an assumption that people wouldn't get paid for their wages, so people started leaving. We had to make sure there was cash in the bank and quickly. This is something that as a firm we should be really proud of, because what we effectively did is borrow 100 million pounds, and that was done within 24 hours. We were able to say to all the Lehman staff on the Tuesday, you will be paid at the end of this month. All your colleagues that have left, please ask them to come back and they did.

Tony Bugg:

PwC had its own HR team working with the Lehman HR team to maintain stable relationship with the employees. The best possible job was done. Within the building, it didn't feel like a crisis, given this was a huge global bankruptcy and it was in financial services, it never really occurred to us to think about anybody else.

Helen Shillito:

One of the big legacies of Lehman is that it was a massive trust issue back in September 2008. Actually, that plays into what we at PwC are trying to achieve. We are trying to ensure that there is trust throughout society such that something like this cannot and does not happen again.

Tony Lomas:

I guess the most defining moment here was when we finally got to the point where we knew that we were going to generate a surplus, everyone was going to get the 100 pence in the pound back, plus more, that was the defining moment.

Tony Bugg:

Ten years later, we just look at the 40 billion that’s been realised, and the fact that creditors got paid in full, but actually the way in which market stability and the people were managed was outstanding.

Tony Lomas:

The biggest legacy here is the impact that we have had on regulators, central banks, and governments around the world. There is new legislation, there are new powers of intervention that build off the lessons that have been learned from Lehman. I can't think of a better example on assignment that PwC has ever run that sits squarely within the purpose of the firm. This is what the firm is there to do, resolve issues like that.