Osborne et.al., The Telegraph, Lehman collapse: the drama of a mad 48 hours that will never fade, here. This is why Mo is in the Hall of Fame for Life.
When the troops were briefed, as McDonald relates in his book, there was a strident, dissenting voice. It belonged to Mo Grimeh, global head of emerging markets. His outburst is popularly remembered as “Mo’s last stand”.
“That’s f—ing it?” he roared. “Well, what the hell have those f—ing idiots up on 31 been working on for the past two months? This? You have got to be kidding me. If this is all we have, we’re toast.” Nobody could have put it better.
‘Letting Lehman Brothers go was a bit like taking an aeroplane at 40,000 feet, turning the engines off and letting it crash to the ground in a city. Then being surprised that it caused mass destruction.”
Linda Sandler, Bloomberg, ‘Stupid’ Lehman E-Mail Didn’t Stay “Just Between Us’, here.
Valukas, 67, whose key terms included “risk,” “concern,” “breach,” “big trouble” and “too late,” said Fuld was warned about rising business risks in early 2007, yet encouraged risk-taking until the next year. A March 2007 e-mail Fuld got from Michael Gelband, Lehman’s former head of capital markets, cites forecasts of a slowing economy by top money managers Stanley F. Druckenmiller of Duquesne Capital Management LLC and Paul Tudor Jones of Tudor Investment Corp.
“This is not the B-team,” Gelband wrote. “I heard your view at the risk meeting that odds are in your favor but risk/reward is not good here so I’m trying to get out of as much illiquid risk as possible.”
“Thanks for the update — let’s talk tonite — I am out now,” Fuld replied.
The CEO kept pushing for growth as Lehman neared its risk limits, said Valukas, citing an April 18, 2007, e-mail to Lowitt and others from Kentaro Umezaki, a former head of fixed income strategy for Lehman.
Discussing Fuld’s talk to the fixed-income division the night before, Umezaki wrote, “Basically they heard we don’t have a balance sheet problem: in fact we have excess capacity,” he said. “I continue to be somewhat confused as to what the real objectives of the firm are around managing financial and risk constraints vs. revenue growth.”
“Of course I totally understand the ‘motivational’ aspects of Dick’s presentation,” he told Lowitt, who was co-chief administrative officer at the time.
When Fuld was told in the tight credit markets of January 2008 that Lehman might get money from the Kuwait Investment Authority he wrote, “Let’s discuss” — a Valukas search term that turned up several urgent e-mail exchanges.
Lehman shouldn’t show it needed equity, David Goldfarb, Lehman’s former chief strategy officer, wrote Fuld in two e-mails. “We would join the bad company of the many who had to raise equity,” he said. “Perception issue.”