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Life & Events > 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 ()

Comments:

I try not to think about how all this is going to affect all of us. One part of me says it will turn out okay and a little voice whispers 'don't kid yourself, there are no guarantees that you won't lose all your retirement savings.'
comment by troutbend on Oct 9, 2008 12:09 PM ()
Unbelievable how corruption can thrive and is then rewarded like that. Makes me wish there were a hell where these effers will burn for eternity. I read a good quote today in one of my newsletters that said, "Confident men took leave of common sense and bet on the idea of perpetual profit in the real estate market and crashed. But it wasn't their money. It was your money they were messing with. And that's why we need government regulators. Gimlet-eyed men with steel-rim glasses and crepe-soled shoes who check the numbers and have the power to say, 'This is a scam and a hustle and either you cease and desist or you spend a few years in a minimum-security federal facility playing backgammon.' "

Garrison Keillor, Alternet, October 6, 2008
comment by mellowdee on Oct 9, 2008 11:41 AM ()
WE do not have a free market-haven’t one since about 1931. It has been regulated. Maybe a real free market might have not permitted this. I don’t know—just wondering
comment by grumpy on Oct 8, 2008 6:16 PM ()
It's the worst injustice I think I've ever witnessed.
comment by shesaidwhat on Oct 8, 2008 2:35 PM ()
Such a tragedy of ethics and morals...do these characters think they live forever...poor excuses for a fellow human being...disgusting, absolutely...
comment by strider333 on Oct 7, 2008 8:24 PM ()
I'm not sure I see a difference b/t this guy and Ken Lay.
comment by looserobes on Oct 7, 2008 2:41 PM ()
Why isn't this guy in JAIL????
comment by marta on Oct 7, 2008 12:20 PM ()
comment by kristilyn3 on Oct 7, 2008 9:16 AM ()
geebus! Is that true??? Wow...
If he had a soul he would give some back to everyone...
comment by kristilyn3 on Oct 7, 2008 9:02 AM ()
Jim Cramer put Fuld's name on Jim's "Wall of Shame" a couple weeks ago. Maybe now that shareholders are getting skinned with all the losses from Lehman, AIG, Wachovia, and etc., the shareholders will resist such exorbitant salaries, options and golden parachutes.
comment by jondude on Oct 7, 2008 6:50 AM ()
Maybe he walked away too early to get some of that $700B. Not greedy enough.
comment by stiva on Oct 7, 2008 6:44 AM ()
He is the poster boy for corporate criminal greed. I watched some of yesterday's hearings and he deserved the crucifixion he got.
comment by jondude on Oct 7, 2008 6:09 AM ()

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