Fuld has ditched his CFO and COO, but should he himself follow in the footsteps of Stan O’Neal, Chuck Prince, Marcel Ospel, Mark Litzler and Wachovia’s Ken Thompson?
At the very least, Dick has proven short-sighted.
In April, he declared the worst of the credit crunch to be past. And last month the now departed Erin Callan told CNBC that Lehman would have no need of raising additional cash.
Needless to say, this is no longer the case. Lehman has now posted a huge $2.8bn Q2 loss, is raising (or at least trying to) another $6bn and announced its quarterly results early after its stock plummeted 48% last Monday.
There’s also a slight whiff of ineptitude (or it confusion?). On one hand, Lehman has ditched $120bn of illiquid assets in an attempt to bolster its balance sheet. On the other, it appears to have squandered precious capital trying to prop up its share price.
Lehman came perilously close to the edge under Fuld’s stewardship in 1998, when the bank’s shares plunged 50% following the Russian crisis. The precipice is now in sight again.
Is Fuld’s apparent blindness compounding the risk that Lehman will fall? Or is he still the best man to navigate a return to safer ground? Dump or defend Dick below.