Here's the background to the company that the US government has
decided to sacrifice rather than bail out the profligate. This not a
news story but a background story the ending of which I personally
find utterly distasteful
xxxxxxxxxx cs
===========================
DAILY MAIL 16.9.08
End of the Master of the Universe:
Rise and fall of the Lehman Brothers -
and its boss dubbed 'The Gorilla'
By GEOFFREY LEVY
Just a year ago Lehman Brothers, with its 26,000 staff and huge
influence spanning the five continents, was establishing its own
'Council on Climate Change', drawing together significant people to
formulate global policy in this pressing area.
For a mere bank, no matter how powerful, this was a lofty move which
served rapidly to dispel any doubts that the famous finance house -
and its chairman and chief executive Richard 'The Gorilla' Fuld -
really did see themselves as 'Masters of the Universe', just as Tom
Wolfe described them in his novel The Bonfire of the Vanities.
Today that swollen ego and massive self-belief lies in ruins. One can
only assume that Fuld, an intimidating figure at Lehman, really did
believe that he was indestructible.
Why else would you gamble an empire by taking on high risk deals
known as 'toxic debts' (presumably at knockdown prices) to the point
where their financial exposure was 30 times more than their capital?
Just what old Henry Lehman would say is probably unprintable -
probably that such a disaster would never have happened if a Lehman
had still been running things.
Henry was the hard-working German Jewish immigrant who started it all
in Montgomery, Alabama.
[I skip, at this point, some details in a longish history of the firm
from1844 to recent years - just on or two snippets. -cs ]
Not a bank, just a general store. It was 1844 (- - - - -)
Cotton was an increasingly important crop in the Southern United
States, its value high, and the brothers shrewdly began to take raw
cotton as payment from customers in exchange for goods.
Within a few years, their cotton trading began to overshadow the
general store and in 1858, when the centre of the cotton trade moved
from the South to New York, Emanuel set up a branch office in Liberty
Street.
(- - - - - -) When the civil war ended in 1865 the remaining two
brothers moved their headquarters from Alabama to New York, but they
did help finance the poor southern state's post-war reconstruction.
(- - - - )
In 1887 Lehman Brothers became a member of the New York Stock
Exchange and two years later underwrote its first public shares
offering, in the International Steam Pump Company.
From that moment, Lehman Brothers never looked back. Over the next
two decades, now headed by Philip Lehman, one of their sons, they
became the brains behind the public launching of companies that were
to become household names all over the world - F.W. Woolworth, Gimbel
Brothers, Macy's, the Studebaker Corporation ...
When Philip retired in 1925, his son Robert took over as head of the
firm. During his tenure they weathered the Great Depression and the
crashing equities market by focusing - with great success - on
venture capital.
It was Lehman Brothers who underwrote the shares issue of the world's
first television manufacturer, DuMont, and helped fund the Radio
Corporation of America (RCA).
So the company grew and expanded, ultimately to become richer by far
than most of its clients, and almost as famous.
In the year 2000, Lehman Brothers marked their 150th anniversary with
endless back-slapping and the quaffing of much vintage champagne.
They had zero doubts about their place in the world, a world over
which they were the highly paid masters taking home bonuses counted
in millions, a world which might even grind to a halt without their
rather special skills.
One authoritative trade newspaper would give them the title Best
Investment Bank. Only last year the influential Fortune magazine
named them Most Admired Securities Firm. In London, for the third
year running they were the biggest traders on the Stock Exchange.
No one believed the myth more than Richard Fuld, known as The Gorilla
for the profane and uncompromising way he goes about his business as
well as for his muscular physique. He is thought by some to be the
real-life dealer on whom Tom Wolfe based his subtly observed, muscle-
flexing Wall Street hero Sherman McCoy.
It was typical that when Lehman's offices at the World Trade Centre
were lost in the September 11 attack, Fuld saw to it that trading
hardly faltered, taking over an entire Sheraton hotel and replacing
the beds with desks.
Fuld, 62, a sometime international squash player, joined the firm as
an intern in 1969, the year the firm's senior partner Robert Lehman
died. Lehman is the only company he has ever worked for.
He took over as chief executive in 1994 and had just become the
longest serving chief executive in Wall Street.
Lehman's success fuelled a massive ego. He saw himself as the man who
'built the company' through sheer personal willpower.
Such is his self-belief that he barely seemed to pay attention to
early warnings that the company might be over-exposed. Last year he
earned more than £20million, but this was peanuts compared with his
paper wealth, owning 2 per cent of shares in a firm which as recently
as last year was boasting assets of £350billion - more than Britain's
total imports bill for 2007.
And he doesn't spare himself life's luxuries, with three fabulous
homes in the U.S. alone. Like many of his staff, Fuld was so
confident in the firm and its future that he put most of his vast,
eight-figure bonuses into it.
For years they went up and up. Yesterday he could still hardly
believe that they were worthless.
By GEOFFREY LEVY
Just a year ago Lehman Brothers, with its 26,000 staff and huge
influence spanning the five continents, was establishing its own
'Council on Climate Change', drawing together significant people to
formulate global policy in this pressing area.
For a mere bank, no matter how powerful, this was a lofty move which
served rapidly to dispel any doubts that the famous finance house -
and its chairman and chief executive Richard 'The Gorilla' Fuld -
really did see themselves as 'Masters of the Universe', just as Tom
Wolfe described them in his novel The Bonfire of the Vanities.
Today that swollen ego and massive self-belief lies in ruins. One can
only assume that Fuld, an intimidating figure at Lehman, really did
believe that he was indestructible.
Why else would you gamble an empire by taking on high risk deals
known as 'toxic debts' (presumably at knockdown prices) to the point
where their financial exposure was 30 times more than their capital?
Just what old Henry Lehman would say is probably unprintable -
probably that such a disaster would never have happened if a Lehman
had still been running things.
Henry was the hard-working German Jewish immigrant who started it all
in Montgomery, Alabama.
[I skip, at this point, some details in a longish history of the firm
from1844 to recent years - just on or two snippets. -cs ]
Not a bank, just a general store. It was 1844 (- - - - -)
Cotton was an increasingly important crop in the Southern United
States, its value high, and the brothers shrewdly began to take raw
cotton as payment from customers in exchange for goods.
Within a few years, their cotton trading began to overshadow the
general store and in 1858, when the centre of the cotton trade moved
from the South to New York, Emanuel set up a branch office in Liberty
Street.
(- - - - - -) When the civil war ended in 1865 the remaining two
brothers moved their headquarters from Alabama to New York, but they
did help finance the poor southern state's post-war reconstruction.
(- - - - )
In 1887 Lehman Brothers became a member of the New York Stock
Exchange and two years later underwrote its first public shares
offering, in the International Steam Pump Company.
From that moment, Lehman Brothers never looked back. Over the next
two decades, now headed by Philip Lehman, one of their sons, they
became the brains behind the public launching of companies that were
to become household names all over the world - F.W. Woolworth, Gimbel
Brothers, Macy's, the Studebaker Corporation ...
When Philip retired in 1925, his son Robert took over as head of the
firm. During his tenure they weathered the Great Depression and the
crashing equities market by focusing - with great success - on
venture capital.
It was Lehman Brothers who underwrote the shares issue of the world's
first television manufacturer, DuMont, and helped fund the Radio
Corporation of America (RCA).
So the company grew and expanded, ultimately to become richer by far
than most of its clients, and almost as famous.
In the year 2000, Lehman Brothers marked their 150th anniversary with
endless back-slapping and the quaffing of much vintage champagne.
They had zero doubts about their place in the world, a world over
which they were the highly paid masters taking home bonuses counted
in millions, a world which might even grind to a halt without their
rather special skills.
One authoritative trade newspaper would give them the title Best
Investment Bank. Only last year the influential Fortune magazine
named them Most Admired Securities Firm. In London, for the third
year running they were the biggest traders on the Stock Exchange.
No one believed the myth more than Richard Fuld, known as The Gorilla
for the profane and uncompromising way he goes about his business as
well as for his muscular physique. He is thought by some to be the
real-life dealer on whom Tom Wolfe based his subtly observed, muscle-
flexing Wall Street hero Sherman McCoy.
It was typical that when Lehman's offices at the World Trade Centre
were lost in the September 11 attack, Fuld saw to it that trading
hardly faltered, taking over an entire Sheraton hotel and replacing
the beds with desks.
Fuld, 62, a sometime international squash player, joined the firm as
an intern in 1969, the year the firm's senior partner Robert Lehman
died. Lehman is the only company he has ever worked for.
He took over as chief executive in 1994 and had just become the
longest serving chief executive in Wall Street.
Lehman's success fuelled a massive ego. He saw himself as the man who
'built the company' through sheer personal willpower.
Such is his self-belief that he barely seemed to pay attention to
early warnings that the company might be over-exposed. Last year he
earned more than £20million, but this was peanuts compared with his
paper wealth, owning 2 per cent of shares in a firm which as recently
as last year was boasting assets of £350billion - more than Britain's
total imports bill for 2007.
And he doesn't spare himself life's luxuries, with three fabulous
homes in the U.S. alone. Like many of his staff, Fuld was so
confident in the firm and its future that he put most of his vast,
eight-figure bonuses into it.
For years they went up and up. Yesterday he could still hardly
believe that they were worthless.
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