Felled by Hubris

Today, Sept. 16, 2008, has been by all standards a day that will go down in history for all to remember. Lehman Brothers, the venerable 158 yr-old bank filed for bankruptcy Chapter 11 and with it went 25,000 jobs. In the same breath, Merrill Lynch, the most prestigious retail broker in the country (if not the world) was forced to sell itself to Bank of America. Only six months ago, we all thought that the fall of Bear Stearns, forced into the arms of JPMorgan Chase & Co. would have marked the end of this crisis. Well, not by a long shot.

If you are in financial services, all arrows point to the housing crisis as being the root cause to all the problems faced in the country (and the world) currently. But I say that it was something more basic. It was hubris brought upon by greed. Jimmy Cayne of Bear Stearns, Dick Fuld of Lehman Bros., Stan O'Neal of Merrill Lynch, Sandy Weill of Citigroup, Ken Thompson of Wachovia, Kerry Killinger of Washington Mutual... This readers, is a veritable who's who of GREEDY, inept, aloof, arrogant CEOs who surrounded themselves with yes-men and did not have the cojones to admit that they had no f**king idea of what was happening in their shops. All they cared about was recording record profits so that their paychecks got bigger and bigger and not thinking that their inactions would lead to BILLIONS in losses and thousands unemployed.

The one who most exemplifies this is Dick Fuld. He will be forever the posterboy of the CEO for hubris. I walked by the headquarters of Lehman today. It was so sad. Barriers had been set up to keep the press away, TV trucks all over Broadway, employees walking out with boxes full of personal effects and the most shocking-- a head hunter giving out her card by the entrance. I, for one, was glad the federal government decided to make Lehman the example of moral hazard. The taxpayer cannot be made to pay of the mistakes made by those who in the end remain unscathed with millions in the bank... insane, utter insanity. And its not over by a long shot. We have not seen the end of this and there will be more before the year is out. My prediction is that Goldman and Morgan will be wed to commercial banks by the end of the year, Washington Mutual will no longer exist and a MAJOR commercial bank will fold before the poop finally hits the fan... One could only hope that lessons have been learned but sometime in the future we will see this again--mayor entities felled by hubris. As of Sept. 23, 2008, Lehman's Operations and building for the most part were taken over by Barclays... here are some pics of the former Lehman Bros. HQ, now with Barclay's colors.