UK
The last five days has witnessed the re-shaping of Wall Street, with the takeover of Merrill Lynch by Bank of America and the bailout of insurer AIG. But no event has had more visibly personal consequences than the collapse of Lehman Brothers. At the end of a momentous week, Financial News asked one London-based employee for their own account of the last few days. The employee is known to Financial News, but has asked to remain anonymous.
Wednesday 10 September
Most of this year people were giving management benefit of the doubt. Dick Fuld has been here forever and they’ve been through a lot. The culture of Lehman was: we are one big team and we’ve got through this before, when Russia defaulted on its debt and all that. We came in on Wednesday and expected them to announce something big in their analyst call to make up for the $2.8bn (€1.9bn) loss reported on the Monday.
On the call, management had this amazing way of answering questions and not saying much. The analysts weren’t that hard on them, but they didn’t announce a fundraising or any other plans. As we sat there, listening to it, we thought it was weird. We chatted about it and then I returned to normal business. Then the early press feeds came in. They said: “Lehman announces big loss, does nothing.” They clearly weren’t impressed. But we just went back to work and I went home as normal. This was our last communication from senior management.
Shares close at $7.25.
Thursday 11 September
Pre-market trading started in the US and the market vomited all over the analyst call. I think it had taken them a day to digest the call which basically said nothing. The market opened and it just tanked.
Then we knew we’d be bought. We started reading the press and a takeover was clearly a screaming bargain and we were ripe for the pickings. We continued working on the assumption we were going to get bought by somebody. We began speculating as to where the redundancies would be, depending on who the buyer was. If it was Barclays, the London staff were worried.
Shares close at $4.22.
Friday 12 September
The stock just continued getting pounded. There was the announcement of the big meeting of the Fed brokering the deal, and then Paulson said: “No, we’re not going to give any help.” We kept working and just watching this stuff. At this time, no one had any idea the firm would go bankrupt. We thought the Fed would announce a forced takeover, à la Bear Stearns. Well, you know. They’ve got to play those games of being hard.
Shares close at $3.65.
Saturday 13 September
Throughout the day, I kept checking the internet periodically. The news was back and forth. There was the bad assets-good assets plan. Or maybe Barclays or Bank of America would buy it clean. And all this time, radio silence from senior managers.
Sunday 14 September
Another day compulsively checking the internet. The rumours came and went and we started hearing negotiations had come to a standstill. Lehman had hired PwC to work on the bankruptcy provision, but we just thought this was brinksmanship.
Following the saga on the internet, it had clearly become a fluid situation. We stayed up until 11pm to 12am to see if there would be an announcement, and then I went to bed with no additional news, still thinking there was going to be a deal.
Monday 15 September
Woke up at 6am, turned on my BlackBerry and there was an email from the firm sent at midnight or so, New York time. It said the company intended to file for Chapter 11 with no mention of what was happening in London. All the way into the office I had clients calling, trying to find out what was going on. There was a scene outside on 25 Bank Street [Lehman's headquarters], which was pandemonium with all the press going there to watch the car wreck.
I got into the office and started trying to find out what I had to do for the business. There was no detail on the other entities which had filed. I began to put the details in order. You never really contemplate what will happen if a parent goes bankrupt and it sends a ripple effect through everything you do. We were just focused on how to salvage things.
I spent Monday on the phone with clients trying to find out what could and couldn’t be done, like a doctor in ER, we started tending to things on autopilot. We couldn’t think about what was happening, we were just trying to save the patient. Periodically, we got angry with senior management.
Everyone was scrambling to save the little piece of their world with no leadership. It was just the rank and file. We stepped up to try and save the firm.
Lehman Brothers declined to comment.
This article first appeared on
eFinancialNews.com. It was narrated to Toby Lewis.
I’m starting to get fed up with reading about the woeful disintegration of Lehman and all who sailed in her. It’s time to move on people.
The notion of a job for life died out with Elvis. London was transfixed by it’s apparent ability to grow and grow on the back of debt-gorged consumers.
Yep, move on, people….
I take it neither of you have been in the slightest bit impacted by what happened at Lehman?
Matter of fact I haven’t. But even if I had, I wouldn’t be booing about it all over a website.
I agree with Gordon. We all know the risks in our industry the day we sign our contract. People suffer everyday and nobody cares, so why should lehman people get so mutch sympathy, however sad that such a bank has disappeared? In comparison, nobody cared about the 25,000 who got laid off from from HP
Gordon B, From your two messages, I see that you are “no” professional in the world of banking…Lehman bankruptcy is thebiggest in the history of human beings and people will talk about it all the time (especially for the next few coming months….)
Dick Fuld ought to be jailed.
I agree with Chris, it’s a shame that the government is worry for bankers and no one worry for the 25k job lost at Hewlet Packard… this make you understand what big political power these banks have… My opinion is that US investment banks don’t deserve any help from the government, and, in any case, if they will receive an help the impact will be only to prolong the crisis for an additional year or year and half.
The bettter would be to remove the license to operate to those banks in troubles, to avoid any further problems to the economy… Once all the troubled banks will be out of the market the crisis will be finished and we bankers can start doing business as before… if the government helps banks in trouble to survive, than the crisis will last for much more time….
“Live by the sword – die by the sword” Let’s move on from Lehman’s “heart break” – anyway they wern’t all that good and frankly deserved what they got
fuld and his senior management should be banned from working in the industry ever again. it was v sad for the staff but the smart guys in the office knew the game was up after the bear collapse and that the only way leh could really survive was if it was taken over. it was at this point that the smart staff starting contacting recruitment consultants and de-leveraging their personal finances. the poor woman on panorama and those employers should have been wiser. it’s the law firms that are the safe places to work in the city. banks go under at the end of economic cycles historically. bankers get paid well but the flip-side of the risk-reward is the job security. all the leh staff now crying about their mortgages etc should take a good look at themselves in the mirror. if they learn a lesson then they’ll know to act sooner next time around.
The Lehman collapse has had an effect on a lot of peopole, particularly its staff and subcontractors, but the issue has just faded from the headlines with all the bigger events around AIG and HBOS.
Life must go on
It is true it is sad. But come on guys, most of the people that are today in the street from Lehman have enough to leave very nicely for the next year or so…if it is not for life (and please not the usual “we work hard…bla bla”, it is the same for many others industries without the same amount of money being played with).
I was reading a paper yesterday about one structurer, sacked from Lehman in June: he does not want to get bored being unemployed so he is taking plane lessons and went to the Groenland…
It is sad for PAs, period.
Tony, it is just an investment bank, playing with money. it was prestigious for us, but if you have friends in other industries, just ask them if they knew Lehman before they failed. They were not, and we are not, the real life for the whole world.
This one is just about to understand what we really do, with the worst we could have done in this industry, playing with poor and unaware consumers. Think about all other crisis, we played with companies (indirectly with employees), but here we played with real people.
Lehman is replaceable.
Come on, for the people who worked there, how hard will it be to get another, similar job? Gimme a break. Better focus on the impact of all this (short-term greed) on the rest of the business world..
And so the cycle continues. For all those who have lost their jobs at
Lehman, I know it hurts. But for many at Lehman, who aggressively
stomped over others at the table and were rarely sympathetic/emphathic to the plight of others (i.e. anyone over 40, in financial difficulty etc.), you were caught this time.
The game was played, the firm lost. It will be interesting to see how
this all plays out with the transfer of funds between the U.S. and the U.K.
I suspect that Dick and the boys at the top will manage to look after themselves. But anyone at Lehman should know how the game was played. VV is right, Dick and his crones should be jailed, but this is the ship you chose to be on. High stakes game, high stake losses.
Well, I got made redundant at the end of March and have been out ever since despite a mammoth effort on my part. Whoever thought lending money to poor town America with little or no prospect of servicing or repaying the debt (and a secured loan is only as good as the asset it is secured on – if you can’t sell a house it is worthless) was a great idea needs shooting. Unfortunately not only have major companies such as Lehmans been complicit in this whole sorry credit crunch saga but so have governments. The US and others (ours included) rode a feel-good wave, burying their heads in the sand while consumers fed off of easy, cheap credit with unrealistic future expectations of how they would repay. Stable property prices (or much more modest price growth than we have seen) are much preferable to continuing and massive price inflation. If credit generally had been more controlled, as it has been in the past, we would not be in the position we are in now. Fact.
‘Tony B’ – “Lehman bankruptcy is thebiggest in the history of human beings”
What a silly sentiment. You are obviously too young to remember the 70s and 80s when in the real economy millions were losing their jobs and communities were destroyed wholesale. I do feel sorry for back office folk and admin etc but i have no sympathy for those who were gorging themselves on the unsustainable and risking the economy of this country, threatening people’s livelihoods who don’t even know what banks do.
Hi,
Consider exporting your expertise to the developing world especially Africa. With your diverse experiences, you’ll sell like hot cakes and possibly make a difference.
What happened to Lehman is not unique it’s happening to other companies too, smaller cos who are not an international brand, but nobody focuses on them. Also not everyone who works within finance gets the type of bonuses that the Tier 1 cos give out or have been known to give out. Personally I think the snr mgmt of Lehman should be struck off for a while, they must have known what was happening and if not, they should have not being at the helm, bad recruitment judgement, but then again so should some in the FSA. I think its appaling when I read that Leham repatriated all its funds to the US..lesson if any don’t work for a US Co, they’re not going to change so you have to, don’t give your days and expertise to an organisation that wont value it. I think the biggest lesson for some to follow on from the previous post, “Be nice to people on your way up …cause you never know when you’ll meet them on your way down” ohh boy some people are going to get a real swiping
The impact of Lehman’s fall is enormous. It will affect everyone in the world in many different ways.
We can’t afford to ignore these cases. I have no sympathy for these banks nor believe these banks should be saved. However, the overall impact on the ordinary people and world’s economy is too fatal to let it go.
I just feel the banking system needs more transperancy, more conservative approach and jail those who have played with public wealth so recklessly!
So anonymous, what are you going to do now?
Well this whole sordid affair is about greed..
Tthe bank got so greedy and staff all got fat bonuses.. So I guess everyone has to get to grips with the real world and suffer the consequences..
We are all suffering because of LedMan mishaps and mismanagement…
Sad thing is – you lot speculated your own down fall … there are thousands of people out of a job too.. So join the ordinary folks world-wide who are also suffering and move on..
It just proves the wrong management team/ and staff were employed by the bank to bring this great institution down – looks like you’ve all done a good job ! well done guys “You all out of a job” now think about that !
Life’s experiences – Life’s challenges.Nothing set in stones for ever.
i dont think people realise the impact of the fall of Lehman. let me tell you – it is huge.
and Dick should be surely jailed for what he has done.
Oh, come on! There is still job outside UK&USA!
Learn russian or chinese and go to work for russian or chinese banks. That is where the next big investment banks are going to be. It is time to move East that is it! There is no going to be investment jobs available in USA & UK in the next 5 years. The emerging markets are the place to be from now.
you lehman people were always such crybabies. As a former GS guy, I know how vastly superior we are to you has beens. Good luck
As an ex-Lehman employee, this is typical of their style “one firm, one team” – but when it came to talking about negative information, “not a peep”. I feel sorry for all those ex-colleagues who worked so hard to get there, but i am not surprised at all about how the last days went down. I really admire how this person handled him/herself throughout those days, it reminds me of the people i used to work with. Good luck guys – and to the upper management that let their pride ruin the lives of so many – here’s a big fat middle finger for you all. IDIOTS.
tired of their boring stories of despair. they all lived high on the hog, over paid and produced nothing of value. I have ZERO sympathy for these babies and believe this is the best medicine for the whole lot
I do not beleive that this whole thing is worth a mention heer. Everyonme is trying to play on the e emotions , this a reality and prob. the same in a lot of other industries which have been hit even harder. No one wants to talk about it because the press not the people are concerned. LEH comes with a lot of glamour even after the collapse so all these things are there. These are the same bankers who have made multi million $ bonuses and have enough money to last them long, moreover they will get the jobs again. The thing is that we should not feel sorry but bring people to book because no one is thinking of people who really got affected ; people who trusted LEH and invested their saving and now have nothing. They were no way involved but still paying a higher price than LEH guys. I think the focus should be on fixing the accountability rather than being sympathetic. This is the way this industry work high risk high return and risk means both good or bad.
As a former LEH guy – left a year ago – .. I am getting sick. Reading the bull about the great unique culture, one team blubb blubb.. whenever we recruited we had to give the entire speech – own by te employees – how cool is that.. stock is better than cash.. makes you feel part of it.. guys have great fun with your piles of shares.. (i was short this time…) happily sold last november.. let me assure you all the talk is just self defense.. many of the people are very agressive, lonely riders.. not smooth managers.. lehman is not MS or GS, more like the old DLJ or a Lazard.. it is gone and will be quickly forgotten. the impact is large but will also be over soon..
Guys – lets not forget what Nomura offered in terms of guaranteed bonuses to LEH staff in London. I am not feeling sorry for you