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s. Its principle activities include investment banking, private investment management, asset management, etc. Lehman Brothers corporate headquarters in located in New York, and it has regional headquarters in London and Tokyo.
From the end of the Civil War in 1865 to 1920s, the United States has gradually changed from an agricultural country into an emerging industrial country. And Lehman Brothers was also gradually shifting from a commodity broker company into a company that involved in securities trading, commercial banks and investment banks business. At 1887, Lehman Brothers became a member of New York Mercantile Exchange.
Until May, 2008, Lehman Company has assets of 639 billion dollars, senior unsecured notes of 110.5 billion dollars, subordinated unsecured notes of 126 billion dollars, junior notes of 50 billion dollars. U.S. sub-prime crisis broke out in the summer of 2007. Because of a large number of mortgage-backed securities, the share price of Lehman Brothers decreased by nearly 95% within a year after the sub-prime crisis. According to the company’s financial report, at the end of the third quarter of 2008, the total shareholder’s equity was only 28.4 billion dollars. To raise funds to ride out the storm, Lehman Brothers had to look for the acquirer. However, negotiations with the Korea Development Bank ended without result. And the bank of America and the United Kingdom’s third-largest bank Barclays announced to give up the acquisition after the U.S. government refused to provide guarantees for the acquisition. After all the efforts failed, Lehman Brothers declared bankruptcy.

3.3 Study on case of AIG
AIG, American International Group, is the world leader in insurance and financial services. AIG is also the world’s leading international insurance organization with operations in more than 130 countries and territories worldwide. AIG companies provides services for the commercial, institutional and individual customers through the world’s most extensive insurance industry, property insurance and life insurance network. However, in the current financial crisis, AIG has suffered heavy losses. To explore the reasons of the AIG crisis, we can understand the characteristics and drawbacks of the operation of U.S. financial markets.
When the AIG crisis broke out, the insurance business of AIG operated normally, but the real crisis came from other investment business. On the one hand, AIG was fully involved in the housing mortgage market. AIG mainly played the issuer of super-senior credit default swaps (CDS) and the investor of sub-prime loans. The financial product unit of AIG sold large numbers of CDS, but CDS had a loss of 11.472 billion dollars in 2007 and 28.602 dollars in 2008. On the other hand, the risk within the company was too concentrated. In addition to direct involvement in the mortgage market, AIG also carried out a large number of Securities Lending Business. And this business had a loss of 18.2 billion dollars in 2008.
AIG crisis has revealed shortcomings of the international financial system. AIG crisis is a major node of the U.S. financial crisis. It profoundly reveals the historical background and the shortcomings of the contemporary international financial system. First of all, financial institutions are very difficult to be immune from systemic financial crises. Sub-prime loan itself is an underlying asset of high risk. Following this,