More on Lehman Brothers
by Tom on December 1, 2008
in Market Musings
Barry Ritholtz at The Big Picture has an overview of the Lehman scenario. A couple of thoughts about it:
- It’s something that illustrates to me that there is and has been a lot more going on behind the scenes than what we realize.
- That the ability of the people on Wall Street to handle the risk of the investments that they made is questionable at best.
Read the article and read the New York Magazine story and let me know what you think.
Tom
Steve Fishman’s New York Magazine cover story on the last days of Lehman is a must read. There’s too much in it synopsize here. But the narrative of Fulds failure to find a buyer explains exactly why the government couldn’t and shouldn’t have saved the firm:
After the bankruptcy, Paulson insinuated that Fuld had not searched hard enough for a buyer, but the truth was that he spent his summer in desperate talks. There was little interest, though. Lehman’s crown jewel was its real-estate businesses, and real estate was where all the problems were. The search for a buyer was not only frantic but humiliating. Fuld told Bank of America, one potential buyer, “I think I can do a lot if I remain CEO, but it’s not a condition,” recalled one who was involved in the process. “Near the end, it was said in calls precisely. ‘We have two priorities, that the Lehman name and brand survive and that as many employees as possible be saved,’ ” said a Fuld intimate. It was a carefully crafted script. In conversations with buyers, Fuld added, “You notice our priority isn’t price.”
The guys that didn’t answer Fuld’s phone calls are the same guys that we hope will answer Bernanke’s phone calls…