Embracing her inner showgirl-meets-17th century pirate, former Lehman CFO Erin Callan shows up in Fortune wearing an odd choice of blouse to say (and show!) that not only did this Stella get her groove back, but you know what, “I was lucky to get out.” (Bet she didn’t feel that way at the time!) She’s got a hot new job as head of the global hedge fund business at Credit Suisse and the see-through feathers to prove it.
Here’s what Erin said about Lehman:
Did you see the Lehman bankruptcy coming?
Nobody thought this was a possibility. In other downturns, market conditions improved. The firm had a history of coming out on the other side and doing well. But the harsh reality of this environment is that asset prices were declining at a shockingly fast pace, so the firm ran out of time. Raising money to address declining prices wasn’t going to work.
What were the problem assets?
The commercial real estate portfolio really was the albatross of the firm. organisations have to balance market volatility with a belief that the portfolio is worth its par value in the long run. The lesson, which is something every good trader or anybody who’s in the risk business knows, is to cut your losses. It’s hard to do that if you think the endgame should be different, but sometimes the market tells you it’s time. Perhaps John Thain was able to cut his losses at Merrill (MER, Fortune 500) because he wasn’t emotionally attached. He had analytical distance.
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