Lehman Brothers’ collapse will remain an epic event in the history of financial crisis. On September 15 2008, the day the financial giant made public its downfall, was the peak of the crisis and a starting point for snowballing dramatic events in the financial world.
After more than four months, Victor Dan told Wall-Street how he felt the impact of the news, as former employee of Lehman.
“On September 14, a former co-worker at Lehman called me at the office. He told me something on the phone, about what would happen the next day. When we got there, everybody was clearing their desks, the street was blocked and the paparazzi were lining the street. It looked like a burial ceremony under somber skies”, said Daniel.
Lehman Brothers was probably one of the few Wall-Street juggernauts where it didn’t matter what college you had graduated or how good you were in your job.
“You didn’t have to have degrees and pedigrees or to graduate the finest schools. I had supervisors who didn’t even finish college and who were the Wall-Street’s most profitable traders”.
Rumors say the arrogance of Lehman Brothers and the cult created by the company’s CEO were the moral causes of the giant’s failure.
“Dick Fuld was the most longeval CEO on Wall-Street and created some kind of cult of Lehman Brothers. Some say this is one of the reasons why the bank collapsed. The company grew, it had the best employees in research, trading and investment banking. Dick became very popular and had wide expertise, which led to arrogance in the end. Lehman took many risks because it was the best”, said Victor Dan.
Dick Fuld commanded for 15 years one of the best known and experienced banks in United States. After the bankruptcy, the international media said in many reports he had been the “manager who drove Lehman Brothers to collapse”.
After the bankruptcy, the international press speculated that Fuld had had the opportunity to sell the giant to a Korean company, but the deal didn’t conclude because of some misunderstandings.
“Some say he agreed to sell the firm, but that he had two claims: the company to keep its name and to benefit of the possibility to buy it back anytime. The Koreans didn’t accept the claims and the deal dropped”, said Dan.
Few days after the failure, Japanese-based Numura Holdings took over the bank’s operations in Asia for 525 million dollars. British-based bank Barclays is now the full owner of LB’s activity in America and Europe.
Although when the bank cracked the Romanian was no longer under Lehman, he had enough inside sources to find out more details. Victor Dan said many of the employees were moving from Barclays to Nomura.
As for the moment of the failure, he says the US Government didn’t take full control of it. “In this case, the lawmakers acted based upon the principle of free economy. Paulson and Bernanke didn’t agree to assign the money to the Government to rescue the financial mammoth”.
Bailing out companies is not a solution that the Government applied only in some cases, sometimes being blamed or supported.
Dan Victor says the idea of bailout is shallow, as he is partisan to the concept of free economy.
“We have already seen that Lehman’s downfall without an intervention from the state had a domino effect. But afterwards, they bailed out AIG and Citigroup, because they were stronger. Carmakers are also on the brink of failure, they cannot compete with Japan manufacturers for example, but if you cut one million jobs, the effect will spread throughout the entire economy. Because those people have loan rates to pay, therefore it will be a credit crisis and retail crisis, which would lead to a domino effect”.
In lipsa unui acord scris din partea InternetCorp, puteti prelua maxim 500 de caractere din acest articol daca precizati sursa si daca inserati vizibil linkul articolului The story of a ground-shaking collapse: Four months since the crash of Lehman Brothers.