Toronto Star: Revisiting recession's ground zero 1 year later


Larry McDonald, whose book on Lehman, A Colossal Failure of Common Sense, documents the firm's implosion, believes Lehman's woes can be traced to a smattering of hairy real estate deals, of which the McAllister Ranch was one. The developer, SunCal Cos. of Irvine, Calif., entered into a series of development deals financed by Lehman, loans that grew from the modest millions to approximately $1.6 billion, predicated on the unsustainable notion that real estate values had nowhere to go but up. Today, McAllister Ranch is abandoned scrub. Its saving grace, says Hanson, is that its on-the-outskirts-of-town locale means no one has to look at it much. "They had all that debt to Lehman Brothers, and everybody knows what happened to Lehman. They got killed."