Lehman

Lionel Barber

A speech by Lionel Barber, Financial Times editor, at Hughes Hall, University of Cambridge, May 1, 2014. An accompanying video can be viewed here.

Ladies and gentlemen, distinguished guests, I am delighted to be here tonight at Hughes Hall in the University of Cambridge. This is the prestigious City lecture, but sadly I will not be providing slides. As Lord Acton might have said, power tends to corrupt, PowerPoint corrupts absolutely.

Tonight I want to talk about bankers and banking. These days, bankers are widely viewed as greedy, self-serving, amoral or actually dangerous. Estate agents, even journalists, are held in higher regard.

This past week’s kerfuffle over bonuses and remuneration at Barclays and Royal Bank of Scotland is a reminder that bankers continue to be held responsible for the financial crisis and the economic calamities which followed.

Bankers appear to be living in a parallel universe, where the rewards are far out of kilter with what the rest of society can expect. This speaks to a deeper unease about inequality which explains the unlikely best-seller on economics, Thomas Piketty’s Capital in the Twenty-First Century.

My questions tonight are: Can bankers mend their ways and their reputations? Is there a path to rehabilitation? Read more

John Gapper

Lehman Brothers collpsed in 2008. Getty Images

The demise of London’s merchant banks, which were sold to US and European banks in the mid-1990s after the collapse of Barings in 1995, showed they could no longer exist in the modern world of finance.

Was the US much different, though? Looking back at the 2008 financial crisis, the collapse of Lehman Brothers had roughly the same effect on the Wall Street investment banks as the collapse of Barings in 1995. Read more

From the FTdotcomment blog:

For those baffled by all the talk of repos, accounting rules and hidden leverage, a quick round-up of those against whom the court-appointed Anton Valukas, “examiner” of Lehman Brothers, found that legal claims would have “sufficient credible evidence to support a finding by a trier of fact” – what he calls “colorable claims”. You can read the full 2,200 page report here.

At Lehman, thanks to the discovery of “repo 105″, used to hid borrowing and make levels of leverage look lower:

  • Dick Fuld, chief executive
  • Christopher O’Meara, former chief financial officer
  • Erin Callan, former chief financial officer and until recently at Credit Suisse
  • Ian Lowitt, chief financial officer

 Read more

Lehman report blames top executives FT
The genesis of Repo 105 FT Alphaville
Report Shows How, Collapsing, Lehman Hid Woes DealBook, NY Times
The “Repo 105″ Scam: Zero Hedge
The U.K. Origins of Lehman’s Accounting Trick DealBook, NY Times
Lehman report: Enron redux Lex, FT