Lehman Brothers chief executive Dick Fuld may be ousted from his position, according to senior executives at the securities firm. Fuld’s perceived resistance to selling Lehman Brothers is prompting executives within his firm to wonder if he will have to be removed if the firm is to be sold, a move seen as increasingly required by the downturn on Wall Street.
On Monday Fuld participated in his firm’s earnings call announcing a quarterly loss. While the detailed discussion of Lehman’s financial position quieted many critics, Fuld was widely perceived to be resistant to selling his firm. But there are many at Lehman who are unsure that the firm can prosper independently.
In order to diminish risk from turbulent markets, Lehman dramatically lowered its leverage in the past few months. While this should limit losses, it is also seen as limiting Lehman’s upside. This morning on CNBC Charlie Gasparino reported that a large investor and senior executives inside of Lehman are convinced that the firm must either get acquired by a larger partner or dramatically shrink in size. Senior executives who spoke with DealBreaker have said there is growing concern that Fuld’s commitment to Lehman’s independence might be foreclosing the sale option.
The growing caucus of dissenters to Fuld’s reign at Lehman apparently remains a minority view. But people familiar with the matter say that the dissenting view will likely grow if it becomes clear that Lehman must either sell or shrink.
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We got a call out to Chainsaw Al Dunlap right now; see what he’s been up to…
@9:13 – chainsaw al? c’mon, didn’t that guy barely escape jail time?
also I liked the comment – “Senior executives who spoke with DealBreaker”. investigative reporting, I like it…
and by sr. executives, they mean jr analysts
haha likely.
“if it becomes clear that Lehman must either sell or shrink”
by the time it becomes clear it is too late john. if it becomes clear, it means the firm is already failing and in that case yes dismissing the CEO is a given.
If LEH loses its independence, then the rest of Wall Street will be flushed down the toilet along with it. We need LEH and LEH needs us – as separate profitable entities… or else.
Investorcluzo– and you think barely escaping jail time is just some sort of run-of-the mill skill? it’s kind of a key requirement if your shares are trading at a .71 multiple to book, no?
@9:50 – good point (escaping jail time); however, like many financials these days, book is a moving target (and very subjective). so 0.71x book could turn out to be 1.50x book after the next earnings release.
All the potential buyers are waiting for the JPM-Bear situation. IE, a full put to the Fed after they come and ask you to save it. Fuld is a dead man walking. His whole handling of the Erin Callan sitch made him look weak. Either he is an idiot for hiring her, or an idiot for firing her. Either way, he is an idiot. I make the over/under on Fuld 2 months.
Book value…..paleeze.
We know where all of it is stashed…
To think some people give props to this prick (fuld) for his “leadership” during LTCM. I guess doing nothing but hold and hope deserves many rounds of applause from the jerks on broad street however this time “dick” will not be able to get away with hold and hope. The only thing he’ll be holding is his own dick….
MS
InvestorCluzo– point well taken! Now… are you suggesting the market could price up a premium for those assets by next quarter or could the company price down the assets to market by next quarter?
Chainsaw Al died years ago. Few tears were shed.
LEH must be sold. If Fuld is resisting, he’s dumber than I thought. Hiring the woefully unqualified Callen was a joke.
That RBS analyst in the opening bell news summary is a crackpot. Listen to him at your own peril.
Look for 1324 near-term bottom in S&P.
Post-Olympics Oil falls dramatically putting wind in the sails of the equity markets just in time for Labor Day.
Enjoy your summer bitches…
– Dave Chappelle
@10:08 – definitely price down. I hate to be a pessimist, but placing assets in the “level 3″ category wreaks of proscrastination…for the next write down. so the stated book will drop, raising the multiple without the price moving (just like magic).
Gasparino also reporting that “thousands” of Lehman employees are to be laid off in next round….great.
I would recommend Gasparino for CEO… After all he “has been following financials for 15 years”.
Addendum: Regarding Callen, she was “promoted” to CFO, where she was woefully unqualified. She seemed to be a decent banker though, fwiw bitches . . .
–DC
“has been following financials for 15 years”.
he means his etrade account.
Or his bank statements.
Fuld’s daughter is in my class at Wharton (WG ’09). Wonder if LEH will be singled out in any case discussions next year?
What is left of Lehman without Fuld/Gregory? The writing was on the wall for those of us inside when the most senior risk manager and the most senior legal officer were (separately) shunted aside over the past two years to make room for more “business-friendly” successors. A culture of risk-taking without understanding was the sub-text for everything Lehman did over the past two-three years.
To all you M&A Pro’s on DB:
Does a firm like Lehman, or any other i-banks for that matter, have a break-up value? If so, how ‘real’ is it?
How would you go about putting a valuation on it?
It’s Bear deja vu all over again!
Time to get your “puts” out on LEH…..
You should be thrown out of Wharton for 2 reasons: 1) for writing something dumb that nobody cares about and 2) for reading this article and commenting on it in the first place. Don’t you have anything better to do?
I agree with the 6/19 10:25 AM post. What a loser. Get a life.