A. Explain the similarities and differences between the situation that occurred at Lehman Brothers in the years leading up to bankruptcy and the situation faced by China Evergrande Group today?
B. What lessons can companies and the Malaysian government learn regarding the Lehman Brothers and China Evergrande Group cases? Explain with more comprehensive.

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Lehman Brother In 2001, the US Central Bank lowered its benchmark interest rate quite sharply to only 1 percent. The aim is to stimulate the negative US economy. The reduction in the benchmark interest rate followed by bank credit interest rates is expected to be a stimulus for US society. Credit for business activities and consumption, such as KPR, could also be boosted. Lehman Brothers took advantage of the low federal funds rate (FFR) and began calculating the profits that would be obtained by investing in the real estate market. Over the next five years, billions of dollars in loans poured into the real estate market. The booming housing market transformed Lehman Brothers from a small company into the fourth largest investment bank in the USA. The housing market in the US has been growing since 2001. Tempted by the large profits, Lehman Brothers also distributed mortgages to people with low and irregular incomes-which were known as subprime mortgages. This category has a big risk of contributing to non-performing loans due to inability to pay installments. Blinded by profit calculations, Lehman Brothers continued to provide financing to the subprime mortgage sector. The reason is simple. If a consumer has a high risk of default due to a low credit score, then the credit interest charged to that customer is higher than average. For the company, that means profit. Although at the same time, the risk of bad credit lurks. Failure to pay debtors also became an advantage for Lehman Brothers. The assumption: if the customer fails to pay the mortgage, the residence can be confiscated and become a Lehman Brothers asset. After that, the house can be resold by the company at a competitive price. In other words, there is no such thing as a loss. Page 1 Lehman Brother In 2001, the US Central Bank lowered its benchmark interest rate quite sharply to only 1 percent. The aim is to stimulate the negative US economy. The reduction in the benchmark interest rate followed by bank credit interest rates is expected to be a stimulus for US society. Credit for business activities and consumption, such as KPR, could also be boosted. Lehman Brothers took advantage of the low federal funds rate (FFR) and began calculating the profits that would be obtained by investing in the real estate market. Over the next five years, billions of dollars in loans poured into the real estate market. The booming housing market transformed Lehman Brothers from a small company into the fourth largest investment bank in the USA. The housing market in the US has been growing since 2001. Tempted by the large profits, Lehman Brothers also distributed mortgages to people with low and irregular incomes-which were known as subprime mortgages. This category has a big risk of contributing to non-performing loans due to inability to pay installments. Blinded by profit calculations, Lehman Brothers continued to provide financing to the subprime mortgage sector. The reason is simple. If a consumer has a high risk of default due to a low credit score, then the credit interest charged to that customer is higher than average. For the company, that means profit. Although at the same time, the risk of bad credit lurks. Failure to pay debtors also became an advantage for Lehman Brothers. The assumption: if the customer fails to pay the mortgage, the residence can be confiscated and become a Lehman Brothers asset. After that, the house can be resold by the company at a competitive price. In other words, there is no such thing as a loss. Page 1

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A Similarities 1 Real Estate Speculation Both Lehman Brothers and China Evergrande Group engaged in extensive real estate speculation Lehman Brothers invested heavily in the booming housing market con... View the full answer