Debt Views

On the day – in the credit crisis dairy — that Bear Stearns got saved by the US government, one might wonder where the real heroes are. Where are the real leaders amongst all those that have followed their financial neighbors?

Lehman brothers is a company that has been transformed by Richard Fuld since he is in command of the company. Originally it was a “bond house” and Fuld expanded and diversified the company for example by buying a money management firm (“Neuberger Berman, a firm focusing on the affluent”) by which investment banking was introduced successfully.

In 2001 due to 9/11 the company had a very hard time because its office got ruined. The “Hard lessons: Centrally locating systems and personnel can put you out of business; phone lines should not terminate in one location; and people need to gain experience in working remotely” (0).

Fuld was honoured by (an article of) Barron’s

“… Fuld brings passion and competitiveness that are powerful even by Street standards.” “… Fuld has made the bond specialist into a rival to Goldman Sachs and Morgan Stanley.” “Lehman’s stock is up 20-fold since ’94. That’s good news for employees, who own 30% of the company” (1).

In 1994 employees owned only 4% of the stock of the company and under Fuld leadership this increased to this 30%.

Another nod from Wall Street came in January 2004 when Institutional Investor ranked Fuld first in its annual Best CEOs in America survey in the Brokers & Asset Managers category.

Last year profits declined somehow where his pay got cut by 22% percent. After years with declining interest rates and high profits for the bond investors like Lehman “Slumping stock and bond trading last year pushed Lehman’s net income down to $1.03 billion in the year ended Nov. 30 from $1.26 billion a year earlier. (3)

This company has been successfully led by a man “who started at Lehman in 1969 as a commercial-paper trader” (2)

Today (17th of march) the stock of Lehman Brothers falls 28% to currently 28$… Despite the spectacular profile of Mr. Fuld, The market has second thoughts… We can only speculate, perhaps the market is overreacting, perhaps the financial situation is worse than expected.

Perhaps the real leaders are those who didn’t want to “follow” the investment game. Last February, Orin Lehman, died at an age of 88. He was of the Lehman family but “turned to public service rather than a career in his family’s investment company.” Eventually he became New York State’s longest-serving commissioner of Parks, Recreation and Historic Preservation. Shortly after he retired, the Rockefeller Institute issued a report saying that state parks had deteriorated after years of budget cuts. Mr. Lehman agreed, saying he hoped the report would inspire new financing.

“You can get discouraged,” he said. “But you have to be realistic. We have terrible problems with health care, crime, drugs, AIDS. Everyone’s doing the best they can.” Although he relied on metal canes for the rest of his life, Mr. Lehman made a point of visiting every one of New York’s state parks, often walking their trails. When he retired, he called his commissionership “the greatest job in the world; you’re always visiting wonderful places.” (4)

May he rest in peace.

Today in the financial market it is easy to see who have been the followers. The real leaders? I wonder where they are. Perhaps Mr. Lehman was one, when he decided not to continue the investment business but to administrate parks instead.

© 2008 Hans Bool

(0) http://www.cio.com/article/31296
(1) www.lehman.com/who/awards/2007/barrons_respected_ceo.htm
(2) www.referenceforbusiness.com/biography/F-L/Fuld-Richard-S-Jr-1946.html
(3) query.nytimes.com/gst/fullpage.html?res=9800E4DB103CF932A35750C0A9659C8B63
(4) http://www.nytimes.com/2008/02/23/nyregion/23lehman.html