Category Archives: Richard Fuld

In my blurb on September 14, 2008, I tried to simplify the reason why Lehman Brothers failed. Well, we finally have the former vice president of Lehman Brothers come out with a book on July 21st titled A Colossal Failure of Common Sense that confirms all that I tried to convey in my simple posting. A top down culture of arrogance was the reason that the company failed.

As you read through the book you'll find that the head of Lehman, Richard Fuld, resisted all efforts to keep the company afloat. The mistaken belief by Fuld that he could easily avoid failure because of the prior bailout of Bear Stearns (otherwise known as moral hazard) is what led to the ultimate fall of Lehman. Additionally, it didn't help that while Paulson and Bernanke were trying to create sweetheart exit strategies for Lehman, Fuld maintained an "in-your-face" my way or the highway attitude.

As a sidebar, my comment that Bank of America "must really be in trouble" was precient considering that on September 15, 2008 the stock closed at $25.86. Even after rising 295% from the March 6, 2009 low, Bank of America is still trading 51.62% below the September 15th price. My September 14th thoughts on Bank of America got me to wondering where the company was headed so I did a Dow Theory analysis of BAC the very next day. I highly recommend that you re-read my analysis of BAC, it is well worth your time. Touc.

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