Lehman Art Auctioned in Effort to Pay Creditors

Art from Lehman Brothers was auctioned off in New York, Saturday, Sept. 25, 2010.

September marks two years since the biggest corporate bankruptcy in U.S. history, the collapse of the 158-year-old Wall Street brokerage firm Lehman Brothers, which saw investors lose more than a half-trillion dollars. The firm's liquidators are still trying to find funds to pay off creditors.

With the rap of the auctioneer's gavel, another symbol of Wall Street's recent gilded age fell to earth.

Art once adorned the executive suite at Lehman Brothers. Connoisseurs consider it an impressive collection of contemporary pieces. A painting by Julie Mehretu was a top seller at $1 million, reports CBS News correspondent Tony Guida.

"These were very smart people buying very smartly at the right moment," says Sotheby's worldwide head of contemporary art Tobias Meyer.

Too bad collecting art wasn't Lehman's main business. At the same time the investment bank was snapping up Rauschenbergs and Richters, it was also grabbing office buildings around the globe, often paying top dollar.

"They were much better at picking art than they were picking commercial real estate," says Lawrence McDonald, author of "A Colossal Failure of Common Sense: The Inside Story of the Collapse of Lehman Brothers."

Real estate proved to be the iceberg Lehman couldn't - or wouldn't - see. The bank leveraged itself to its eyelids with reams of residential mortgages that it carved into shaky securities. When it all went bad, Lehman toppled and no one could stop it from happening.

"This bankruptcy was 10 times the size of Enron," says McDonald.

It was $660 billion to be exact. It nearly took the entire American economy down with it. Lawrence McDonald traded junk bonds at Lehman for four years. His book blames the bank's collapse on arrogance in the board room, not feverish action on the trading floor.

"The story of Lehman Brothers comes down to one sentence: There were 24,992 people making money and eight guys losing it," he says.

Sotheby's raised $12 million Saturday selling Lehman art, hardly enough to tip the creditors' limo drivers. In the two years since Lehman imploded, Washington and Wall Street have created new rules that they hope will prevent future cataclysms. Will they work? Wall Street and main street are watching.