Since Lehman Brothers bit the big one, many people have abandoned Dick Fuld. Former employees, friends, Erin– they all want nothing to do with him. There doesn’t seem to be much to gain in staying loyal to the ex-CEO, other than knowing you’ll never have to wonder whether or not you’re getting an honest answer to the question, does this outfit look like shit? (In fact, you won’t even have to bring it up– Dick will gladly broach that subject.)
So when it was suggested last week that Charlie Gasparino owed David Einhorn and all the critics of Lehman Brothers an apology, for saying that those claiming the bank was in a bad way had no idea what they were talking about, and that, were it to come down to a fight, street or otherwise, he’d have his money Fuld smoking all these fools, some peole might’ve assumed CG would admit the error of his ways and go on record to state that he’d officially stopped returning Fuld’s calls. Unfortunately, these people failed to remember two things: 1) Charlie Gasparino neither makes mistakes nor admits to them and 2) he never, ever turns his back on a friend. For these reasons and more (DF has dirt on CG), Charlie poses an interesting theory in his latest Daily Beast column– the guy preparing the report on Lehman released last week had an interest in making Fuld and Co.’s actions look worse than they maybe were–, that all in all, in said report, Team Lehman didn’t come off that bad and the Dick Fuld? Charlie’s still got his back.
I’ll be the first to tell you that Fuld was a good CEO who over time became arrogant and delusional, and with that allowed his firm to embrace risk in astronomically absurd ways, particularly as Lehman became more successful. Increasingly, he appointed yes men and yes women to senior posts, including Erin Callan, who in my opinion was grossly unqualified to be the chief financial officer of a major Wall Street firm that was rolling the dice on esoteric bonds. [...] But consider this: Valukas, a former U.S. attorney, works for the Lehman estate. It’s his job to get money for the estate to make creditors whole. In doing so, it’s his job to make Fuld & Co. look as culpable as possible in the way they handled the firm’s finances as it slid into bankruptcy.
Then consider something else: For all the time spent on this report, and the amount of evidence collected, and the high-ranking executives interviewed, there’s very little here to show that for all their recklessness, Fuld, Callan, and the rest of the crew knew that what they were doing was illegal. Quite the opposite: They thought the slimy ways they manipulated the firm’s balance sheets (the report makes reference to a particularly odious thing called “Repo 105”) were a legal way to make bad stuff look temporarily better. They even asked their auditors, Ernst & Young, if it was OK and it was, at least according to the accountants.
I’m da world’s foremost expoit in arrogance and delusion, so all-a-yous should pay attention to what I say. DF is a friend-a-mine, and I don’t like anyone trash-tawkin my friends.
It’s not like he’s going to be convicted or anything, so who cares?
I can’t wait to see what will happen to E&Y.
-guy who can’t wait to see what will happen to E&Y
3- can I be the guy who hates guy’s who(insert inane wish/opinion/comment here)? Is that role taken?
- guy who wonders if guy who hates guy’s who(insert inane wish/opinion/comment here)is taken
At minimum Lehman was wrong to classify assests or liabilities in this manner. Dick though he could bend the will of the world to reflect his. He did for sometime, but now he and his lemming followers will most likely soon face criminal charges of fraud.
Dick thanks for, well, being the best Dick you could be. Erin, Chris, and Ian one of you better be the first to cut a deal and sing before the others do. Something tells me Erin probably already beat you both to the SEC.
@3
http://www.arthurandersen.com/
Lehman was using Repo 105 type strategies for years – the only thing that changed was the collateral – what firms took the otherside of these “transactions” and therefore accepted the underlying?
HuffPo
http://www.huffingtonpost.com/vicky-ward/why-did-lehman-behave-so_b_497173.html
I’ll never forget a post on Vault in the late 90s about LEH: “This place is a run by a bunch of joeys from brooklyn”
Actually Cap Mkts was run by a bunch of idiot grads from some 2 bit college in NJ and Huntington, LI…Lessing left and bought a hockey team.
@7, do you or have you ever worked on “wall street”? doubt it
Mark Walsh was the biggest fuck up at Lehman.
@6 ixnay on the eporays. remember your harpocratic oath.
I worked at Lehman in finance and was very aware of their Repo 105 balance sheet issue. It was a given that billions of dollars would get dumped from the balance sheet the night before quarterly reporting to lower the risk numbers.
If you think other firms are not doing the same exact thing, you are naive. Who do you think takes on these overnight trades? Why do you think Investment Banks have non-calendar quarter ends and traditional banks have calender quarter ends. So we can all dump the crap on our balance sheets to each other when they are reporting to the street. Better metric for 10Qs…avg daily balance sheet positions.
As for the Huff Post article. At Goldman we would constantly hold back large gains or losses and trickle them in at opportune times to avoid any scrutiny. No one wants to rock the boat or draw attention because a 12 hr day will quickly become an 18hr day. Its easier if you can minimize the variances. Thats the way ALL places work.
“Valukas, a former U.S. attorney, works for the Lehman estate … it’s his job to make Fuld & Co. look as culpable as possible in the way they handled the firm’s finances as it slid into bankruptcy.” Chewing that one over, trying to figure out where exactly the logic lies …
Also trying to figure out why this doesn’t merit a reposting of Callan’s butt or her hottie firehose handler …
So it was Pixie Dust’s fault because she was grossly unqualified but not the Dick’s fault for hiring her to be grossly unqualified?
And Charlie, Chazza, come on now! They even asked(read, “paid”) their auditors to determine if it was OK and they said it was??!?! How many Brooklyn Bridge sales do you make a month?
Given that you’ve absolved Dick from any wrongdoing, I guess you won’t consider the fact that no US law firm would provide Lehmans with an opinion letter permitting the true sale accounting treatment under US law, would you?
the auditors always know best
-big 4 staff accountant
@15:
You see, da way I practice my brand a joinalism, is to only take da word of friends-a-mine. You can’t trust no one, ya know, but yer friends. Dare is neva any need to get udda points-a-view, and it takes too much time away from punishing my massive pecs.
By da way, did yous guys know I almost married a girl from Texas?
- CG, the Thug
Oh, by da way @15, I have no problem wit da fact dat da auditors are all paid by da companies dey audit. Dare’s no issue wit dat at all.
Only wit da rating factories. In dare case, its da issuer pays model dat’s da problem. Da issuer pays model is only a problem wit da rating factories. And you heard dat direct from me, da Thug.
- CG
An Ernst & Young spokesperson inadvertently released this draft statement:
Ernst & Young is committed to quality in everything we do. With that in mind, let’s look at the facts. Lehman was a prestigious client. Inside the firm we call such clients “global priority accounts”. Outside the firm, we work such client’s names, and our relationships with them, into conversations with prospective clients as part of a poorly-veiled strategy designed to impress these prospective clients with our reputation and presumed prestige. Such name-dropping, in concert with nonstop shameless self-promotion and the Securities Acts of 1933 and 1934 constitute the three pillars of our go-to-market strategy.
As a client, Lehman was not only prestigious but also very profitable. Between audit fees and other various engagements we’ve received hundreds of millions of dollars from this client. We can’t seriously be expected to bite the hand that feeds us can we? Besides we already went through all the hoops of making sure that no individual staffed on the engagement had a direct financial interest in the client. As for the firm’s direct financial interest in the client, that remains totally legal.
Furthermore, Ernst & Young would also like to point out the preposterous nature of expecting a bunch of $70K per year junior staffers that are working until midnight to prevail over $700K per year bankers working into the wee hours of the morning. If any capital market participants genuinely relied on the audit report, then they were probably not sophisticated enough to have been investing in investment banks. Viewed from that perspective, such losses were very likely inevitable. At the same time, the firm would also like to remind capital market participants of all the good audits the firm has completed that haven’t yet blown up. Notwithstanding the firm’s involvement in the recent barrage of restatements, failed companies, and generally the past decade; Ernst & Young plays an important role in our nation’s capital markets by providing market participants with dubious and often unreliable assurance regarding the integrity of our client’s financial statements.
Ernst & Young would also like to take this opportunity to implore Congress to act by further entangling itself in this train wreck. More specifically, the firm would encourage Congress to consult with our industry in expediting a poorly-thought, reactionary, knee-jerk bill mandating all SEC registrants to comply with a new set of prohibitively-expensive, dogmatic and onerous regulations if they wish to remain listed. For its part, Ernst & Young will set about designing inane new audit programs to be executed unquestioningly by legions of spineless half-wits. As always, the firm’s partners will meekly negotiate with the client’s management in a back room somewhere regarding the audit report. As punishment for its continued failure, Ernst & Young stands ready to be saddled with millions of additional billable hours of work restoring investors’ confidence in the markets.
The government may have been moderately successful in its poor attempt to legislate the firm’s appearance of partial independence from its clients. Even so, the continued existence of our firm would suggest that that the government has yet to adequately legislate competence and ethical conduct.
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