Half Fuld

New York Mag Puts An End to the Lehman-Should-Have-Been-Saved Talk

Steve Fishman’s New York Magazine cover story on the last days of Lehman is a must read. There’s too much in it synopsize here. But the narrative of Fulds failure to find a buyer explains exactly why the government couldn’t and shouldn’t have saved the firm:

After the bankruptcy, Paulson insinuated that Fuld had not searched hard enough for a buyer, but the truth was that he spent his summer in desperate talks. There was little interest, though. Lehman’s crown jewel was its real-estate businesses, and real estate was where all the problems were. The search for a buyer was not only frantic but humiliating. Fuld told Bank of America, one potential buyer, “I think I can do a lot if I remain CEO, but it’s not a condition,” recalled one who was involved in the process. “Near the end, it was said in calls precisely. ‘We have two priorities, that the Lehman name and brand survive and that as many employees as possible be saved,’ ” said a Fuld intimate. It was a carefully crafted script. In conversations with buyers, Fuld added, “You notice our priority isn’t price.”

Lewis broke off negotiations in favor of Merrill. No one else would take the bank along with it’s bad assets. Pay particular attention to the section of the story where Fishman illustrates the instinctual management that produced a team that was over-matched by the crisis.


Burning Down His House
New York Magazine, November 30, 2008

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