It’s been almost four years since the collapse of Lehman Brothers and now we have access to a huge cache of the bank’s bankruptcy documents thanks to law firm Jenner & Block. [via DealBreaker]Given what happened, you’ll probably find some of the email exchanges between Lehman executives downright ridiculous.
We’ve also included this amazing research report from Morgan Stanley in the few months leading up to the bank’s demise saying that Lehman was “poised for profitability.”
It’s definitely a treasure trove and we’re going to share some of the best of them with you now. We’ll update this slideshow as we come across more nuggets from the “Bros.”
'We believe that the loans that Lehman originated in 2005 and 2006 through the captive volume were originated under relaxed standards (i.e.at Aurora) and that the residuals retained from these securitizations may come back to haunt Lehman.'
Here's an email from sent to some Lehman managing directors in 2007 about a Bloomberg article on Bank of America's CEO Ken Lewis saying a credit bubble was about to burst. Wait for the response...(on the next slide)
From Ian Lowitt (who later become Lehman's finance chief Ian in 2008): 'Do we have the balls to be the ones who pull back first to lead the market??'
Here's an email exchange about a year before Lehman filed for Chapter 11 bankruptcy protection. The exchange was about CITIC (China International Trust and Investment Corporation) considering an investment in a U.S. bank. Check out the responses that followed... (on the next slide)
David Goldfarb to Fuld: 'Any potential investor that would consider BS in the same breath as LB should go fungoo themselves!!!' Well, we've never heard that expression before.
And then they start talking like frat boys... Fuld: 'The BRos always wins!!' and Goldfarb responds: '...will and skill always win, and that be us!!!!'
In April 2008, Fuld sent Lehman's former chief legal officer Thomas Russo his key 'takeaways' from his dinner with Hank Paulson.
Russo responds with '...It is that belief that will make LEH special and a place where our children will be proud.'
President and COO of Lehman Bart McDade: 'This is exactly why the drug is a problem...', which is in reference to Repo 105 -- a highly criticised accounting transaction.
In May 2008, Erin Callan called Greenlight's David Einhorn -- who publicly shorted Lehman -- 'disingenuous' following a phone conversation and email exchange because she felt he has 'cherry picked' her comments and 'set her up' ahead of a presentation he was giving.
And here's an excerpt from Einhorn's epic smack down response to Callan. 'I suspect that you claim that I have been 'disingenuous' stems from your own knowledge that you may have made untrue statements in our call...'
Lehman's former chief legal officer Thomas Russo sent this email to the SEC calling out legendary derivatives trader Boaz Weinstein, who now runs credit hedge fund Saba Capital, for his Lehman CDS positions.
This Morgan Stanley report from June 30, 2008 said Lehman Brothers was 'poised for profitability' with a $31 price target. Whoops!
And guess where that analyst, Patrick Pinschmidt, is now? He's a senior policy advisor at the U.S. Treasury Department, according to his LinkedIn!
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