DUMBEST OF 2008 #4
By Gregg Greenberg, 09/19/08
"It's a tragedy ... Bobbie (Lehman) is spinning in his grave."
That's what long-time Lehman Brothers partner Herman Kahn said following the firm's sale to Shearson/Amex in 1984, according to Greed and Glory on Wall Street: The Fall of the House of Lehman by Ken Auletta.If he was rolling over then, one can only imagine what Bobbie's doing now. He should be haunting former CEO Dick Fuld for driving the 158-year-old firm into the ground. With so much stupidity still swirling around Lehman's sudden demise, the Five Dumbest Lab selected a few items too good to pass up before saying our final goodbyes: Leaving on Top: Institutional Investor awarded Lehman Brothers the top spot in September in its annual All-America Fixed Income Research Team rankings, defending its title for the ninth straight year. Bove's Bungle: "I still believe that this is one of the best companies on Wall Street and that it has value well beyond its current stock price. Therefore, the stock remains a buy," said Ladenburg Thalmann analyst Dick Bove on Sept. 11 with the stock's price at $7.25 and sinking. Asleep at the Board: What's especially revealing about Lehman's demise was the average age of its 10-member board: 74.3 years. Their backgrounds are even more revealing. Counted among the board are such business bastions as a theater producer and a Navy admiral. Anyone still wondering why things fell apart? We won't even ask if anyone believes that they earned the $360,000 in average compensation they received. Waxman Pathetic: "Our hearings will examine what went wrong and who should be held to account," Henry Waxman, the Democratic congressman from Los Angeles, said in September when he announced hearings that will include Dick Fuld and former AIG CEOs Robert Willumstad and Maurice "Hank" Greenberg. That was the kind of decisive response we've come to expect from Congress. Fuld's Farewell: "The past several months have been extraordinarily challenging. For some of you, the firm has been your home for decades. For others, less than a year. For all of us, it has been far more than a place of employment. It has been a source of pride." Email from Richard Fuld in September, CEO of Lehman Brothers, 1994-2008. Yes, Dick, you've got plenty to be proud of. Update 12/26: Fuld refused to sell Lehman to save it and when he finally changed his mind, it was too late. In November, Fuld and his wife sold 16 works of art at Christie's for $13.5 million. Unfortunately, the auction house guaranteed the former Lehman CEO $20 million for the lot, thereby taking a multi-billion bath on the deal. Another case of art imitating life. (The most successful Fuld piece? Gorky's Study of Agony I sold for $2.2 million. Ah, the irony - and the stupidity