Risk Management

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Melanie Rodier
Melanie Rodier
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The 12 Most Spectacular Financial Services Failures of All Time

As a result of its spectacular tech fail on Aug. 1, Knight Capital became the latest financial services firm to have pushed to the brink of collapse before being either rescued at the eleventh hour or permanently wiped out.
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Salomon Brothers

In 1987, weeks after Warren Buffett made a $700 million investment in the bond trading powerhouse Salomon Brothers, the firm disclosed a surprise $70 million write-down from bad bets made by trading junk bonds. In 1991, Salomon was caught up in a bond trading scandal that pushed the firm to the brink of bankruptcy. To protect his investment, Buffett became the chairman of the firm for 9 months. According to the New York Times, he found that every dollar of shareholder equity was supporting $37 of assets -- even higher than the 30-to-1 leverage ratio at Lehman Brothers when it collapsed in 2008. He successfully steered the firm away from bankruptcy. Salomon was sold to Travelers for $9 billion in 1997.

 

Melanie Rodier has worked as a print and broadcast journalist for over 10 years, covering business and finance, general news, and film trade news. Prior to joining Wall Street & Technology in April 2007, Melanie lived in Paris, where she worked for the International Herald ... View Full Bio

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