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.
The financial environment that we faced in the run-up to the crisis – and, by “we”, I mean the public, investors, counterparties, supervisors and regulators – was non-transparent, and the risks were getting more and more complex. And then it all went wrong, and many financial institutions had to be bailed out by governments.