Friday, March 25, 2016

And No One Is Suprised

Crash Dick
Lehman Bros. CFO, Erin Callan (L), And CEO Dick, Circa 2008

As the 2008 Crash was still ongoing, the U.S. Congress (at that point, still controlled by Democrats) held hearings in the House Of Representatives; if the Crash had happened a year later, the Rethugs would have been in charge, and it's doubtful hearings would have been conducted.

One of the principal figures called to testify was Richard "Dick" Fuld, the CEO of Lehman Brothers -- before all the fun, valued in the multi-billions of dollars, the only "investment bank" to have utterly and completely failed when the Crash came, sending its employees into the street carrying cardboard boxes of personal items and a Thank You, then declaring bankruptcy in September, 2008.

His testimony came roughly three weeks later -- it had already been reported that Fuld would be paid $250 million in direct and indirect compensation for the year, before the bankruptcy was filed.
Mr. Fuld, by turns combative and contemplative, and often pained by interruptions of his answers, repeatedly denied that any misrepresentations [i.e., of the true value of CDOs being sold as investments to clients] took place. Even when confronted with internal documents that seemed to tell a different story, Mr. Fuld said he believed until five days before the Sept. 15 bankruptcy filing that Lehman remained in decent health.
“No, sir, we did not mislead our investors,” Mr. Fuld said in response to a question from Dennis J. Kucinich, Democrat of Ohio, who wanted to know how Mr. Fuld’s public statements could be valid in light of efforts by JPMorgan Chase to secure $5 billion in extra collateral from Lehman in the final days.
“To the best of my ability at the time, given the information I had, we made disclosures that we fully believed were accurate,” Mr. Fuld said.
Now, Erin Callan, Lehman's Chief Financial Officer in the last eighteen-plus months before its collapse, has published a memoir of those times, "Full Circle". Callan had repeatedly warned both "Dick" and senior managers at Lehman that their exposure to toxic mortgage packaging in CDOs was not only "bad", but Ruh-Roh Bad. As the only woman in a testosterone-soaked boardroom atmosphere, not onkly was she being paid less, but "Dick" and his sycophantic buddies didn't feel they had to listen to her, either.

 This Little Piggie Had Roast Beef (Photo: Doug Mills / NYT)
When Callan ... took over as CFO, the plan to get rid of some commercial real estate assets was “in the 18th draft,” ... She pushes her colleagues harder on the topic pretty much from the start, a claim Callan substantiated by emails obtained by both the commission and the bankruptcy court examiner’s report penned by Anton Valukas...

Callan... was smacked down by the kind of diversionary tactics that men rarely are forced to confront in the workplace. These episodes are even more galling when recalling Fuld’s nickname: the Gorilla, so-called for a penchant for punchy patter... Callan nevertheless appears to be the only one who had the sexist card played against her – and at precisely the moment her persistence was most needed.
The New York Times in October, 2008 also noted,
While defending his own pay [~$500 Million between 2000 and the 2008 bankruptcy]...  Mr. Fuld was asked why Lehman approved nearly $20 million in payments for two departing executives about a week before the bankruptcy filing...
The committee also released e-mail messages sent in June [2008] in which Mr. Fuld and George H. Walker, a Lehman executive and cousin of President Bush, responded in what Mr. Waxman called a mocking tone to a suggestion that executives at the company decline bonuses.
In November, 2008, "Dick" transferred ownership of the principal home he shared with his wife, bought by them in 2004 for $13.75 Million, to her for the sum of $100. He was named by Conde Nast Portfolio as the "worst American CEO of all time".  Fuld has not been barred as a securities trader and has continued to operate unhindered in the financial sphere since the Crash.

Lehman Bros. London Office Sign, Auctioned At Christie's, 2012
Callan saves one surprise [in her book] for the end. In January 2015, Fuld called her. It was their first contact since she left Lehman. He apologized for leaving her “on my own to handle things” and told her he still thought she was the best choice to be CFO... Fuld at the time, however, was months away from making his first public speech since Lehman’s collapse. He again would blame everyone but himself for the bank’s collapse. 
There was a crime, but no punishment. "Dick" lives very comfortably -- as do the heads of the Five Families, the Dimons and Blankfeins. Tens of millions of Americans (so far; you think this is over?) have been savaged by the greed and sociopathology of people like him.

Everyone knows what the Crash was like; c'mon, folks, you lived through it. This was less than eight years ago. And none of these persons have spent one day in jail -- think about that.

And -- very little has changed to prevent another Crash from happening again. Think about that.

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