Financial contagions can be triggered easily, if conditions are right. First one financial institution falls and then others follow, like a chain of falling dominoes.
The cinder that sparked the global financial crisis in 2007 is considered by many to have been a March 14 briefing by executives of the Lehman Brothers’ investment bank.
Under intense questioning from financial analysts, the executives admitted the bank had overstated the value of billions of dollars in subprime mortgages.
This news saw Lehman Brothers’ stock price crash, and led to investors losing faith in the entire edifice of complex financial deals that had been so profitable for banks and brokers.