Richard Fuld

Fuld was the CEO of Lehman Brothers when the firm collapsed in September 2008.  In fact, Fuld had been CEO since 1994 and was the longest tenured Wall Street CEO at the time of the financial crisis.  Because Lehman failed, Fuld has been excoriated for all sorts of inadequacies as a business manager.  Of course, the simple – if unpleasant - truth of the matter is that Lehman Brothers wasn’t managed much differently than any of the other large Wall Street firms.  As some evidence of this, in September 2008 Tim Geithner was briefing Treasury department officials on Lehman Brothers.  Bear Stearns had failed earlier in 2008 and by September Lehman was considered extremely vulnerable.  During this briefing Geithner nonchalantly claimed that Lehman needs to secure $230-billion in “overnight” financing via repurchase agreements or “repos” to keep its business going.  

Granted, by 2008 Wall Street had been conditioned to believe in its version of the toothy fairy, namely the “Greenspan put.”  The Greenspan put fueled the Wall Street notion that no matter what happened, the Fed would always be there to pick up the pieces.  That said, the madness associated with a bank – even an investment bank – needing hundreds of billions of dollars in “short term” overnight financing simply to keep its financial head above should be self-evidently idiotic.  More importantly, it is a business model that is completely incongruent with anything remotely resembling banking or finance in a traditional sense.  The fact that Wall Street regulators like Tim Geithner were completely unconcerned about the enormous amount of short-term borrowing by Wall Street firms shows that the idiocy that sunk Lehman Brothers was running rampant up and down Wall Street and the Federal Reserve.  The mistakes made by Lehman Brothers and Richard Fuld were not unique.  

Additional Information:

See Tim Geithner (#24) for more details on his enormous fecklessness and the role this played in the crisis.  See Alan Greenspan (#29) for more information on the Greenspan put and the speculative madness this concept engendered up and down Wall Street.