Former Lehman Brothers CEO Dick Fuld is making his first public speech since the demise of Lehman in September 2008.
Before its bankruptcy, Lehman Brothers was the fourth largest Wall Street bank.
Fuld, who had been CEO since 1994, delivered the keynote address at the Marcum MicroCap Conference in Midtown Manhattan.
During the Q&A he was asked why he didn’t just “ride into the sunset.”
Fuld responded in jest, “why don’t you bite me?”
Then he went on to say, seriously, “I didn’t think I had a choice.”
It’s unclear what exactly that means, but it is clear that Fuld has something of a sense of humour.
‘Lehman was not bankrupt’
During the Q&A, Fuld was asked to discuss his most triumphant versus his most challenging moments at Lehman.
“September 2008, we lost the firm,” he said. “In 94, the most challenging piece was getting my team together. How do we get people to drop their weapons, play together?…the challenge wasn’t a moment — It was an evolution.”
Fuld continued: “You don’t have time to hear about all the things I’d have done differently.”
The moderator then summoned the audience to clap Fuld into disclosure, which he did.
“Hindsight is 20-20. There is no if we, woulda, coulda, shoulda.”
“I was blessed with a terrific team, for the most part. We were in it together,” he said. “It’s wonderful for me to talk about the culture…But then, you have the right to ask me ‘then, OK, if it was so great, what happened at the end?'”
Fuld said that Lehman had a “mandated bankruptcy.” At that point he sounded a little defensive, saying that Lehman had unencumbered collateral of $US127 billion and equity capital of $US28 billion.
“I have always said, and now it’s being proven, Lehman Brothers in September 2008 was not bankrupt.”
Culture was the ‘real success’
Before the Q&A session, Fuld told the crowd that “Lehman was one of the great Wall Street banks,” touting the firm’s culture as its “real success.”
That isn’t how he and his firm have been painted in the public eye, however. Fuld was one of the major characters blamed for the mortgage crisis.
By his estimation, though, the financial crisis was caused by a “perfect storm” of easy credit that started with the government’s desire to have “everybody… be able to fulfil their view of the American dream.”
“I had 27,000 risk managers because all employees owned a piece of the firm,” Fuld said.
“There’s so much I’d love to say. Enough said on that. Time to move on. “
There has been speculation on Wall Street that Fuld was re-entering public life because he wants to start a new firm, but he didn’t talk about any future plans at Marcum.
Fuld did talk about the state of America, though.
“Why has the belly of America been ripped out,” he asked the crowd. “The guys that need it can’t get funded,” he said, but corporates are taking on debt, hoarding liquidity and not spending on capex.
Fuld also sounded concerned about income inequality: “Capitalism only works if it starts at the top and filters down.”
Perhaps the most interesting part of the talk, though, was how he waxed philosophical about Lehman before he was CEO — or rather, what Lehman used to be.
- Fuld said that when he joined the company in the late 1960s. “My mentor was [another ex-Lehman CEO] Lew Glucksman.”
- At times, he seemed to ignore the history of Lehman’s ultimate demise, referring to “the modern Lehman.” He also called it “one of the great investment banks on Wall Street.”
- “The key differentiator was culture. There was no turf.”
The turf war that ultimately ended Lehman’s partnership structure in 1983 is well documented in Ken Auletta’s Greed and Glory on Wall Street. That’s the story of how Fuld’s mentor, Lew Glucksman, the bank’s head of trading, feuded with Pete Peterson, the bank’s head of investment banking.
The ensuing battle ended with Lehman selling itself and changing forever.
Maybe Fuld slightly mis-remembers a few things?
“My motto is that was then, this is now,” he told the crowd.