The Murder of Lehman Brothers, An Insider's Look at the Global Meltdown by Tibman Joseph

Author:Tibman, Joseph [Tibman, Joseph]
Language: eng
Format: epub
Publisher: ipicturebooks
Published: 2009-10-12T16:00:00+00:00

Richard S. Fuld Jr., chief executive officer of Lehman Brothers, testifies before the U.S. House Oversight and Government Reform Committee October 6, 2008 on Capitol Hill in Washington, D.C. Fuld told the committee, “I take full responsibility for the decisions that I made and for the actions that I took.” He defended his actions as “prudent and appropriate” based on information he had at the time. 'I feel horrible about what happened,” he said. Committee chairman Rep.Henry Waxman D-CA,questioned Fuld on whether it was true he took home some $480 million in compensation since 2000, and asked: “Is that fair?”

KAREN BLEIER/AFP/Getty Images), October 6, 2008

grindstone overachievers, and more true feelers than the single one identified during leadership off-sites.

* * *

Goldman, in the first quarter of 2008 experienced a profit decline, but fared better than Lehman, again in large part due to a bet against subprime. But the favorable impact of that bet had dimmed. It clearly had a certain shelf life and would not offset the onslaught of crumbling financial markets indefinitely. Other firms, ones that were not captive to rumors, actually did far worse in 2008’s first quarter than either Goldman or Lehman. Merrill Lynch posted a loss of close to $2 billion. Citigroup’s number was a negative $5 billion. Behind these numbers were more troubling figures. Together, Merrill and Citi had taken $45 billion in writedowns.

Meanwhile, Lehman’s titans continued to wield their swords to slay the dragons that were actively working to consume us in their fire-breathing rumors and short-selling.62 Erin, whose name by now was hard-wired to the phrase “most-powerful-woman-on-Wall-Street,” made the rounds, arranging numerous meetings and calls to reassure important investors and business counterparties that Lehman was not the next Bear Stearns. To her credit, I have heard she pushed the few above her for more disclosure of financial information. It is now apparent that she was only mildly successful. Still, many found her straight talk (at least that is what they believed it to be, and in all likelihood, so did Erin) refreshing. But at times, in her fervor, her efforts back-fired, and she found herself holding the tail of a tiger that was snapping at her head. Lehman was in deeper muck than it likely understood, but there were lucid minds outside the firm that on occasion solidly challenged her contentions.

There was little we could do to quiet the rumors, other than brandish even greater bravado. In late March, Lehman successfully launched and funded a $4 billion preferred stock issue. Our management disingenously told the world that we did not need the money, that the only reason we undertook so substantial an offering was to show everyone that we could. That was it. We fucking could. So put that in your pipe and smoke it, we told the world. And when I say “we,” this time, I do mean many of us. I, personally, repeated this explanation to all outside Lehman who asked about the capital raise. (Unfortunately, it turned out, what we were peddling was not the absolute truth.

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