Today is the eight year anniversary of the collapse of Lehman Brothers. Completely mind blowing.
Discuss.....
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Still one of the most interesting threads on WSO:
http://www.wallstreetoasis.com/forums/just-so-you-guys-know
Thanks for linking that. Crazy level of foresight from OP in that thread.
I remember reading that thread as I had just finished as a 3rd year analyst at Citi and was going on vacation for several weeks before starting a job at a boutique in Denver. I had been working in financial sponsors coverage, and the amount of leverage put on PE deals in late 2006/early 2007 was clearly not sustainable. Everyone knew it, but people had to do what others in the market were doing to win deals. I was glad to be moving down market and away from deals that were debt dependent.
How much leverage were you seeing and what were the purchase multiples like around that time?
First time I read that post, I didn't realize it was a throwback and I remember thinking "oh fuck, not again." One of the most prescient views on the market I've ever read.
DickFuld have you watched HBO's "Too Big to Fail"? In the movie its depicted that you were the reason the Koreans left negotiations for a deal with Lehman. How much of this was true?
Also in hindsight would you have taken a deal from Buffet or no?
http://www.wallstreetoasis.com/forums/ask-fake-dickfuld-january-2016
Sorry, man. He had all of us convinced.
@dan_yo23" I knew it was the fake Dick Fuld...just wanted to play along and get "his" take on the crisis.
Stands up and starts chant, "It's all your fault! It's all your fault!"
I'm pouring out some Bombay Sapphire in remembrance.
Barclays ftw nuff said
RIP Lehman. Don't think Barclays is doing that great either, they're in retreat.
Hank Paulson pls.
Been there done that. My favorite cartoon from that week (9/15-9/20) was bank buildings crashing into each other like dominoes, with Lehman crashing into ML and MS next. My favorite was when nobody in trading showed up to work on Monday even though we all still had some post-BK responsibilities.
Every 10-20 years a major bank goes under in a spectacular fashion. Today MS's assets/equity ratio is 1/2 what most banks were in 2008, but we can never forget Lehman and Bear, nor Enron, nor Drexel Burnham, EF Hutton, or Continental Illinois before that.
A solid, well-run bank today can easily turn into a basket case in a matter of 2-3 years or less. (EF Hutton actually pulled off the feat overnight during the crash of '87 when, supposedly, a specialist on the floor of the NYSE misinterpreted maintaining orderly markets and went on a crazy buying spree)
Fuck, i was 15 back then. I remember NOTHING. I read a lot, still can't grasp my head around a major bank collapsing almost overnight.
While we're on this topic what were the strengths of Lehman Brothers and Bear Stearns? I didn't care for nor did I follow IBs back when the crisis was going on (late high school to Freshman in college).
I'm assuming Lehman was big in S&T with perhaps Bear being the same? How did they fare compared to others in M&A and deal flow on the other side of IB?
My uncle was on a fixed-income desk at Lehman for various mbs products and said they were a mortgage powerhouse while it lasted.
I've heard but can't confirm that Bear was a better, or even the best, place to be for mortgages..
Lehman was right up there with JPM, MS, and GS. S&T and equity sales were their bread and butter. Read DickFuld's Non-target to BB CEO thread if you want to know more.
In fixed income, Lehman was stronger than MS, and on par with JPM and GS. (I may be biased)
I worked in the part of the bank that generated the risk numbers and analytics for corporates on the Lehman Aggregate Bond Index. To this day most banks still lack the capability to do what we were doing, and when the analytic coverage we overlapped with Bloomberg disagreed, we were right a bit more than half the time (it's always a good feeling when you can catch and fix a bad number in Bloomberg because someone fatfingered a call schedule). And we were far from the strongest part of the firm.
2008 is still the worst case benchmark for all our sensitivity testing. A veritable landmark in financial history.
We are always fighting the last recession-- and overfitting our risk models and signals and backtests to as well.
I was just starting out when this happened. Worst time ever to start in this industry.
Funny story: in 2007 I interviewed at Lehman, AIG, AND Moody's and got dinged at all 3. Lucky me.
Lol, its funny how things work out. I bet you were really upset at the time but little did you know...
http://mobile.businessinsider.com/working-at-lehman-brothers-2014-9
Thanks for the post.
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