Richard "Dick" Fuld Testifies Before Congress
(Photo: UK Telegraph October 6, 2008)
Anton R. Valukis is the Chairman of the accounting firm, Jenner & Block. His report to the U.S. District Bankruptcy Court in re: Petitioner: Lehman Brothers Holdings, Inc., Chapter 11 Bankruptcy has just been released (if you'd like to see it in all its .pdf glory, go here).
You may remember Lehman Brothers as the investment house which imploded during the week of September 11th - 16th, 2008 (otherwise knows as The Crash). The Bush administration refused to help bail Lehman out, and its resulting collapse brought down the curtain surrounding the shadow banking system -- a gigantic sewer, which many people had been able to smell (and complain about) for years, but relatively few wanted to see. And the effects of it all are still playing out.
Children Of The Downwardly Mobile: For Them, Sub-Standard
Education, Crowded Classes; Right-Wing Textbooks From Texas;
Parents With Three Or More Jobs; and Later, Few Job Prospects.
But back at the close of the good-for-the-rich, heady, 'go-go' Bush years, that third of the country, currently out of work, was still employed. People were still treating their homes like ATM's, and that little hiccup in some Bear-Stearns' hedge funds in '07, involving Mortgage-Backed CDO's... ahhh; that was nothing to get in a twist over. Right? Sure.
(Full disclosure: That day in mid-July, 2007, when Bear-Stearns' reported closing two CDO-based Hedge Funds, I took everything I had -- not much -- in the 401(k) at my Place Of Witless Labor™ [mostly, European stocks], and moved it all into a Bond Fund. The two B-S funds filed for Bankruptcy two weeks later, and the entire firm collapsed in the Spring of 2008.)
(Most people I know at work lost up to 40% of the value of their stock-fueled retirement accounts over the next two years [most in the period September, 2009 - January 2010]. They did nothing with their accounts since, and even with an upswing in the market have still lost approximately 25%. I kept my account in Bonds; and while it could be argued I've reduced my earning ability in the 401(k) have still limited my losses to 3%.)
Lehman's Chairman and CEO, Richard "Dick" Fuld, was a hyperaggressive, BSD - Master Of The Universe who (as the Jenner & Block report showed) engaged in the sort of behavior Primate specialists are familiar with: Grasping acquisitiveness; displays of extreme territoriality; and exceptionally poor judgment as a steward of other people's money -- but; hey; Dick made $466 Million dollars, personally, between 1993 and 2007.
Lehman Bros. Employees, Escorted Out The Door After Being Fired
In The Wake Of The Company's Collapse, September 13, 2008
In early 2009, Fuld was revealed to have sold his wife their jointly held $14 million, 3.3 acre Florida beach-front mansion (one of five houses the two of them owned, including their 8-bedroom main domicile in Greenwich, Connecticut). The nice touch was the selling price: One Hundred Dollars, "in a possible attempt," noted the British Times, "to move assets beyond the reach of infuriated investors of the collapsed bank."
Gosh. Just like Lil' Bernie Madoff and his wife, huh? Scumbags.
Mr. And Mrs. Dick, Having To Suffer The Criticism Of Code Pink
After Fuld's Public
Regarding The
Barry Ritholz's The Big Picture talks about the Bankruptcy report's lessons:
Major accounting firms are worthless to investors. They were either unable or unwilling to detect fraud amounting to 50 billion dollars. The incompetents at Ernst & Young deserve the same fiery death as Arthur Anderson; Whether they are hired guns or paid whores, they — like the rating agencies — are worthless to investors.
Corporate management engages in fraud all too regularly: Am I reading [the Bankruptcy report] correctly — that Dick Fuld’s defense will be, “I didn’t know that Lehman was a giant Ponzi scheme, and I was unaware we were hiding billions in bad debt and leverage off the balance sheet?”
Teevee Wants You To Forget This Took Place. Just Keep Buying
Stuff, And You Will Not Want To Hang People From Lampposts
Based on the release of the bankruptcy court report, LEH was technically insolvent -- perhaps, years before it collapsed;
...
The SEC is utterly incapable of comprehending how markets function. They believe the criminals who commit the fraud, and ignore the whistleblowers who uncover it;
Obligatory Small Animal Photo In Middle Of Financial Rant
The Media did a terrible job uncovering the fraud as well. Some media folk were used by CEOs. Some of the TV press, who relied on access to their subjects, actually rallied to the defense of these CEOs (including Fuld), and trashed [their critics]. Most notably Charlie Gasparino from his CNBC days, but there were others as well.
Your Future Masters: Children Of Wealth Share A Happy Moment
At Their Private School -- Special Textbooks and Technology,
Organic-Produce Lunches And No Lack Of Funds.
The Analyst community, for the most part, failed as well. The few who publicly acknowledged the debacle were notable for being so far outside of the herd. 95% of them were wrong.
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