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Lehman Brothers for Dummies
Lehman Brothers for Dummies
There was once an investment company called Lehman Brothers. It came into existence way back in 1850. (Actually, there still IS a company called Lehman Brothers, but today it is a shattered, bankrupt shadow of its formerly venerable and powerful self.)
There is a man named Richard S. Fuld, Jr., and he is the CEO of Lehman Brothers. Much like the captain of the Titanic, he was at the helm of the vessel when it struck the iceberg and sank like a stone. Unlike the captain of the Titanic though, Mr. Fuld SAW the iceberg coming and refused to warn even his closest officers that the end was near.
Again unlike the captain of the Titanic, Mr. Fuld did not go down with the ship. He merely let others drown as he hopped into his Golden Lifeboat (Much like a Golden Parachute) and sailed off into the sunset…taking with him $480,000,000 of salary and bonuses.
The collapse of Lehman Brothers is significant. It’s demise shook the global financial and credit worlds to their cores, destroying investors' confidence. It is that lack of confidence that is now spreading like a world-wide tsunami, making stock markets around the world crash, destroying people’s retirement funds, throwing thousands, perhaps even MILLIONS of folks out of work…and Mr. Fuld received $480,000,000 in compensation for his brilliant work.
The four months leading up to Lehman Brothers’ bankruptcy was fraught with premonitions of the horrors that were to come. Mr. Fuld saw them clearly, but he refused to acknowledge them to the world. Instead, he worked hard to deceive people into believing that the company and it’s business practices were sound. His hopes in spreading this deceit was to attract still more ignorant investors. At the same time, he was working hard to placate the fears of the investors that were already onboard.
Worry was everywhere. Shares of the company plummeted. Investors were gravely concerned about default. Bear Stearns, another investment firm similar to Lehman Brothers, went belly-up just four months earlier. And yet, in spite of all of these ominous signs, Richard S. Fuld, Jr. continued to assure investors that his company and it’s practices were sound.
Behind the scenes at Lehman Brothers, it was a completely different story. While painting a beautiful picture to the outside world and handing out rose-colored glasses to even his most trusted subordinates, Fuld was desperately trying to implement secretive and somewhat…shall we say DUBIOUS ploys to keep the ship afloat.
When the iceberg finally hit and smashed a huge and lethal gash into Lehman’s hull, investors lost fortunes, employees were laid off without notice…or severance pay, national economies were rattled to their roots. And Mr. Richard S. Fuld, Jr. was paid $480,000,000.
Today, the world economy is reeling, hardworking folks have watched their 401K’s dwindle down to a mere fraction of their earlier worth, the credit system is in shambles, the American taxpayers are forced to foot the bill that totals more than $700,000,000,000…and Mr. Richard S. Fuld, Jr. walks away with $480,000,000.
Some people tout the concept of Free Market Trade. Well, in my opinion, what happened with Lehman Brothers is an example of what happens when an unregulated Free Market smashes head-on into reality.
The idea of a completely unfettered free market is a wonderful idea until the human element is introduced, and then greed, arrogance, and lack of conscience must be factored into the equation. And if these human frailties are not held in check…well, then people like Richard S. Fuld, Jr. get rewarded for their heartless greed with $480,000,000.
posted on Oct 7, 2008 6:03 AM ()
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