“What could I have done differently? In certain conversations, what should I have said, what could I have done?”
This is what Richard Fuld, lately CEO of the late Lehman Brothers, asks himself a lot these days, according to Steve Fishman’s excellent article in New York magazine. Since there’s nothing I enjoy more than helping out Wall Street CEOs who own five or more homes, I thought I’d give Dick a helping hand here. I’m guessing that Dick has not been a regular reader of this blog, but he’s got a lot more free time these days, so maybe he’ll catch up with this post, sooner or later. Anyway, Dick, if you are reading this post, here’s what you did wrong:
1. You fired Mike Gelband, who was responsible for commercial and residential real estate. Mike told you that Lehman had been making money off real estate deals because the real estate market had been hot, and now it was going to cool off. You wanted to believe that Lehman had been making money off real estate deals because Lehman was smart. You ended up firing or freezing out anyone who told you that Lehman couldn’t keep making record profits indefinitely.
2. You replaced Mike and other senior people with inexperienced staff. That is, they were inexperienced in terms of their responsibilities, but they were experienced enough, and smart enough, to know that their fat salaries depended on telling you what you wanted to hear.
3. You relied on a management/negotiating style that resorted to overt physical intimidation on an hourly basis. A take no prisoners attitude can take you far, sometimes right over the edge.
4. You figured that you didn’t have to worry about bankruptcy because the Secretary of the Treasury was a buddy of yours. Like you had a buddy, anywhere, any time.
5. When you went to see Henry Paulson, you basically told him “Hank, you don’t have the balls to let Lehman fail.” Dick, Secretaries of the Treasury don’t like to be yelled at, particularly by people who are asking for money.
That’s about it, Dick. In a lot of ways, I think you were just unlucky. If you had been born fifteen years earlier, you might have retired before things fell apart, like Jack Welch at GE, and everyone would be writing books about what a genius you were. Sure, you might gone through a messy divorce, but for $50 mill you’d have that bitch out of your hair, a young wife, and your company still picking up the tab for your five homes, limos, private jet, yacht, etc., etc., etc. Life can be so damn unfair!
