Las Vegas Sun

December 8, 2023

Nevada recoups $50 million investment with bankrupt Lehman Brothers

kate marshall2

Cathleen Allison / AP

Nevada Treasurer Kate Marshall testifies at the Legislature in Carson City on March 2, 2011.

Six years after the collapse of financial firm Lehman Brothers, Nevada has recouped a $50 million investment it made with the now-bankrupt investor.

For Treasurer Kate Marshall, the road to recovering the money has not been easy.

Marshall was treasurer when Nevada purchased $50 million worth of A-rated bonds from Lehman in 2007. Now a symbol of Wall Street’s reckless behavior, the investment firm was a titan before the burst of the housing bubble triggered home mortgage defaults and a financial catastrophe that upended the global economy.

The financial crisis resulted in Lehman’s 2008 bankruptcy. That hammered the investment portfolios of states like Florida, Nevada, Minnesota, Missouri and Washington.

Some states sold off their Lehman investments after the firm filed for bankruptcy. Washington wrote off its Lehman investment, costing the state more than $90 million.

But Nevada didn’t.

Marshall, who is now the Democratic candidate for secretary of state, vowed to get the money back after Lehman crashed.

Today, she announced that it had been recovered.

The state sold its share of the bonds for $10 million in July. It recovered $13.6 million from the Lehman estate during the firm’s bankruptcy. The remainder came from interest income accrued from the bonds during the last six years, Marshall said.

Nevada didn’t directly buy the bonds from Lehman. The state contracted with Wachovia, which is now owned by Wells Fargo, to invest some of the state’s portfolio.

Two days before Lehman filed for bankruptcy, Marshall’s office contacted Wachovia about pulling out, she said in 2009. “They said Lehman would make good, 100 cents on the dollar,” Marshall said.

During the 2009 legislative session, state lawmakers encouraged Marshall to sell off Nevada’s Lehman holdings. Marshall told them she would not conduct a “fire sale.”

“The response to an irrational market isn’t fear,” she said Tuesday.

Marshall won her second term as treasurer in 2010 and lost in a special congressional election to Mark Amodei in 2011.

Republicans have attacked Marshall on the Lehman investment for years.

“They like to pretend that somehow that I was the eye of that storm,” she said. “The truth of the matter is that no state treasurer caused the global financial crisis.”

Join the Discussion:

Check this out for a full explanation of our conversion to the LiveFyre commenting system and instructions on how to sign up for an account.

Full comments policy