In hindsight, we can say that the financial sector had become too complex and non-transparent. Technological advances had created various new financial products and instruments whose risks were often unclear. This particularly held for products and instruments involving the packaging and repackaging of exposures, the sale of CDOs (Collateralized Debt Obligations) and CDO2s, and the use of SIVs (Structured Investment Vehicles).
The financial sector’s increasing globalization has also made it more difficult to assess risks properly. It was because of Lehman Brothers’ global presence that its failure had such an impact on the world. In every country where Lehman Brothers had a branch, its bankruptcy had to be filed for and resolved.