Six years, seven months, and 13 days after Lehman Brothers Holdings filed for bankruptcy, its former chief executive, Richard Fuld Jr, is still insisting it did not go broke.
Lehman Brothers was more than 150 years old when it collapsed in September 2008 in the largest corporate bankruptcy in US history. Its failure was seen as a key trigger in the financial crisis. After Lehman imploded, inquiries showed that the company used accounting tricks to mask $50bn in debt, making it look like Lehman was in better shape than it really was.
“Lehman Brothers in 2008 was not a bankrupt company,” Fuld insisted at a conference in Manhattan, his first such public appearance since the financial crisis for which Lehman’s massive Chapter 11 filing marked a tipping point.
During a speech that lasted more than 30 minutes, Fuld waxed nostalgic about the history of Lehman Brothers and his career on Wall Street, and ruminated about financial markets and current events.
At times he flashed a sense of humour, teasing the audience for paying more attention to their lunch than to him.
At other times he became emotional, remembering how “dark” it felt in the aftermath of Lehman’s bankruptcy, and mimicking the way he looks in the mirror and speaks to himself to boost his confidence.
“Open your heart and love and be loved,” he said. “My mother still loves me. She’s 96.”
But Fuld was not humble or contrite. He blamed the financial crisis on a “perfect storm” and characterised Lehman’s collapse as something that was largely outside of his control.
“Regardless of what you heard about Lehman’s risk management, I had 27,000 risk managers at the firm because they all owned a piece of the firm,” he said, referring to Lehman’s employees at the time, who he said were all shareholders.
Lehman filed for the largest bankruptcy in US history on September 15, 2008, after a harrowing weekend during which big-bank chief executives and senior government officials tried, but failed, to come up with a rescue plan. Its collapse triggered a broader market panic that eventually led to a massive taxpayer bailout for Wall Street.
Lehman’s failure also set off years of litigation with creditors and counterparties, not to mention devastating losses for shareholders and employees.
Fuld has blamed his company’s demise on factors ranging from short sellers to the federal government.
He again defended his decision-making, saying it was based on the information he had at the time. He also suggested a lack of liquidity was the true culprit behind Lehman’s demise: “You have to have enough liquidity to ride out the storm. Been there. Done that. No comment.”
Fuld now runs a small company called Matrix Advisors, which he characterised as an old-line merchant banking firm.
“Not a day goes by where I don’t think about Lehman Brothers. I’d love to tell you I’m over it, it’s behind me. Doesn’t happen.”
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