As I was heading out the door this morning to run, Bruce, the Beacon Journal delivery guy, pulled up with the two dead-tree editions of newspapers I get daily: The New York Times and the Akron Beacon Journal. I’ve known Bruce for better than 20 years. First, through youth soccer leagues. Then high school soccer. Bruce wasn’t a happy camper this morning.
Asian stock markets down again.
Financial bailout a debacle — aimed only at saving the Wizards of Wall Street.
Gee. Much more information than what was contained in the Beacon Journal. But what I was thinking about while running was just how mad people are these days. People like Bruce — and me. Both about the same age. Both semi-retired. Both fairly conservative with a history of voting essentially Republican. Both who can’t wait to vote for Obama and the Democrats.
One of the things we’re mad about is that the greed on Wall Street has basically collapsed the country and our economy. Yet the people responsible for this fiasco are doing just fine — with multimillion-dollar exit packages, some negotiated with compliant boards even as the firm was heading into bankruptcy.
Take Richard Fuld — head of Lehman Brothers, now defunct. He made his way to Capitol Hill yesterday to explain how he engineered the train wreck and managed to walk away with millions. Here’s from an article in The Washington Post this morning:
Former Lehman Brothers chief executive Richard S. Fuld Jr. told a skeptical House committee yesterday that he tried various ways to save the 158-year-old investment banking firm, including making a plea for help to federal regulators, but in the end was “overwhelmed” by events.
Lawmakers, in turn, questioned Fuld about why he for years failed to rein in risky investments, paid huge severance packages to departing executives even as the company was seeking federal help, and told analysts that the company’s balance sheet was strong five days before it filed for bankruptcy.
“I wonder how he sleeps at night,” Rep. Elijah E. Cummings (D-Md.) said.
Fuld told lawmakers he hasn’t been sleeping well at all.
“Not that anybody on this committee cares about this, but I wake up every single night thinking what I could have done different,” he said. “This is a pain that will stay with me for the rest of my life.”
Oh, Dick. We all feel your pain.
But something tells me you’ll be OK — given the some $480 million you received from Lehman Brothers, now defunct, since 2000. And you must feel good about this, too. According to an article in The Wall Street Journal this morning: “Inc. agreed to pay a total of more than $23 million to three executives leaving the securities firm just days before it collapsed, according to internal emails made public by congressional investigators.”
That lead to this exchange yesterday between Fuld and Congressman Henry Waxman.
Unfortunately, Waxman and his congressional chums are always late to the scene of the accident. It’s like the joke about internal auditors. They arrive after the fighting is over and then bayonet the wounded. But it’s good political theatre.
But the question of fairness does resonate.
Here’s the end of a story about Fuld yesterday in The New York Times. It seems like some of the average Lehman Brothers employees didn’t make out quite as well as the chief executive.
In the wake of Lehman’s downfall, many of its former employees are left with their lives in pieces. Mr. Fuld, for his part, has lost $800 million in company stock as it fell from its peak just over a year ago. He and his wife have put some of their art collection, worth millions of dollars, up for sale. but he still owns several homes and his net worth is estimated to be around $100 million now.
Ordinary employees are not as well off. Among them are some 1,000 workers who were laid off in the days before Lehman filed for bankruptcy. Last week, they received letters from Lehman Holdings, the bankrupt entity, saying their promised severance payments and health benefits would cease immediately.
Michael Petrucelli, who worked on commission as a salesman for Lehman’s investment management division, said it was bad enough to lose his savings in Lehman stock and his job, but the letter last week was the last straw. The decision about their benefits rests with the bankruptcy judge.
“Life’s not fair. You pick yourself up and move on,” said Mr. Petrucelli, 45, in an interview at his home in Riverside, Conn. “But this is wrong, and this I can’t stand for. They need to just do the right thing.”
I wouldn’t count on Richard Fuld or any of the other Captains of Industry to do the right thing — ever. Not when they can walk away with millions regardless of the results of their actions.
Wonder how well Mr. Petrucelli is sleeping these days?