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A tragedy of hubris and nemesis
September 14, 2008
I have written a column for the FT on Monday on the collapse of Lehman Brothers. Here are the first few paragraphs:
In Greed and Glory on Wall Street, Ken Auletta’s book about the last time Lehman Brothers collapsed, in 1984, Richard Fuld appears as the fierce, proud, introverted head of bond trading. Even at the end, after internal feuding had brought the firm to a halt, he resisted the idea that it had to be sold.
In the end it was sold to American Express and Mr Fuld later became its chief executive. He reformed Lehman as an independent bank in 1994 and never appeared to look back, defying the sceptics who said Lehman would always remain in the shadow of Wall Street firms such as Goldman Sachs.
Lehman changed because Mr Fuld insisted that it had to. He eliminated the internal arguments by relentlessly pushing the idea of teamwork. He expanded the bank’s operations, building up its asset management and equities operations to balance its powerhouse of bond trading.
But Mr Fuld never changed, not really. He was still the same dark, obstinate Lehman loyalist that he had always been – a man who never wanted his firm to be sold. And, in the end, Mr Fuld’s pride and obstinacy stood in the way of Lehman’s desperate efforts in the past half year to right itself.
You can read the rest here and comment below.
Buffett and Munger always quote Lord Keynes “When the facts change I change my mind.” I guess Dick Fuld never read this.
Posted by: Peter Low | September 15th, 2008 at 3:01 pm | Report this commentIf Richard Fuld is not the poster boy for the housing market mess, from fueling the relentless greed for more, more, more, more, to the current meltdown, who is?
Jeff Carnahan
Posted by: Jeff Carnahan | September 15th, 2008 at 6:45 pm | Report this commentOn the assumption that his 2006 and 2007 bonuses were largely stock based, it appears the $68.6 million(Bloomberg sourced figures) Fuld has received since December 2006 is now worth less than $200,000. It’s still not a big enough price to pay for the detritus he has created. The next US administration has enormous regulatory issues that not one of the candidates has mentioned yet. Meanwhile, Dubya (AKA Nero) Bush is warming up his violin as the fires evidencing the moral and fiscal decline of the USA are gaining more fuel. A sad sad day for all.
Posted by: Ronald Jones | September 15th, 2008 at 7:01 pm | Report this commentI wonder whether Dick Fuld will now have to undergo credit counseling, as do Americans who declare personal bankruptcy. This little humiliation is a feature of the ‘bankruptcy reform’ bill of 2005, paid for by the credit card companies and sheparded through the Senate by Joe Biden, who in the process installed his son as a $100,000-a-year liason at MBNA.
Posted by: John West | September 16th, 2008 at 1:58 am | Report this commentThis is how bad it has gotten. We have government (tax payer) backed investment firms giving money to foxes in the chicken coop. We the people, really need to wake up and clean house.
Posted by: Harry | September 18th, 2008 at 12:04 pm | Report this comment