But Fuld obviously wasn’t interested in my suggestions. He dismissed them out of hand. What he really wanted was simply to strong-arm me into believing that all was well at Lehman. He also had another agenda. He wanted to know who was out to get him. Who had to be punished for their short-selling sins. He was like a one-man House un-American Stock Activities Committee. He wanted me to name names. Who was doing this to Lehman, the best fixed-income house in the world? Who was doing this to him, the man who had survived so many putsches and coups and disasters? Who?!
The cavernous dining room suddenly seemed crowded, claustrophobic even. Fuld’s ego had filled the place to beyond capacity, a veritable fire hazard of pride and paranoia. When I left the room I wished I had been back at my old hedge fund joining the gnashing, growling bears, knowing that there were still 43 juicy points between the closing price that day and the Götterdämmerung that this once-legendary firm now faced.
We all know what happened next. The world was right, and Fuld was wrong. Lehman’s mountain of bad debt was exposed, the government refused to come to the firm’s rescue, and, on September 15, the formerly mighty financial giant filed for bankruptcy, nearly dragging the global economy down with it. So what have we learned from Lehman’s demise? Pretty much everything that’s important about Wall Street, so let’s go down the list.