NEW YORK (Reuters) - Six years, seven months and 13 days after Lehman Brothers Holdings Inc filed for bankruptcy, its former chief executive, Richard Fuld Jr., is still insisting it did not go broke. Former Lehman Brothers Chairman and CEO Richard Fuld testifies before the Financial Crisis Inquiry Commission for a hearing about extraordinary government intervention and the recent financial crisis, on Capitol Hill in Washington, September 1, 2010. REUTERS/Jonathan Ernst “Lehman Brothers in 2008 was not a bankrupt company,” Fuld said at a conference in Manhattan on Thursday, his first such public appearance since the financial crisis for which Lehman’s massive Chapter 11 filing marked a tipping point. During a speech that lasted a little more than 30 minutes, Fuld waxed nostalgic about the history of Lehman Brothers and his career on Wall Street, and ruminated about financial markets and current events. At times he flashed a sense of humor - joking, for instance, that the beverage he was drinking was not alcoholic and teasing the audience for paying more attention to their lunch than to him. At other times he became emotional, remembering how “dark” it felt in the aftermath of Lehman’s bankruptcy, and mimicking the way he looks in the mirror and speaks to himself to boost his confidence. “Open your heart and love and be loved,” he said. “My mother still loves me. She’s 96.” But in his comments, Fuld was not humble or contrite. He blamed the financial crisis on a “perfect storm” and characterized Lehman’s collapse as something that was largely outside of his control. “Regardless of what you heard about Lehman’s risk management, I had 27,000 risk managers at the firm because they all owned a piece of the firm,” he said, referring to Lehman’s employees at the time, who he said were all shareholders. Lehman filed for the largest bankruptcy in U.S. history on September 15, 2008 after a harrowing weekend during which big-bank CEOs and senior government officials tried, but failed, to come up with a rescue plan. Its collapse triggered a broader market panic that eventually led to a massive taxpayer bailout for Wall Street. Lehman’s failure also set off years of litigation with creditors and counterparties, not to mention devastating losses for shareholders and employees. Fuld has blamed his company’s demise on factors ranging from short sellers to the federal government. On Thursday he again defended his decision-making, saying it was based on the information he had at the time. He also suggested a lack of liquidity was the true culprit behind Lehman’s demise: “You have to have enough liquidity to ride out the storm. Been there. Done that. No comment.” Fuld now runs a small company called Matrix Advisors, which he characterized as an old-line merchant banking firm. He spoke before a crowd of 1,300 who were attending a micro cap stock conference hosted by the accounting firm Marcum. When asked in a Q&A following his speech why he had chosen to make his first appearance at the event, Fuld said it was time for him to move on from the past. “Not a day goes by where I don’t think about Lehman Brothers.” he said. “I’d love to tell you I’m over it, it’s behind me. Doesn’t happen.” Our Standards: The Thomson Reuters Trust Principles.
 The Gorilla of Wall Street, as Fuld was known, steered Lehman deep into the business of subprime mortgages, bankrolling lenders across the country that were making convoluted loans to questionable borrowers. Lehman even made its own subprime loans. The firm took all those loans, whipped them into bonds and passed on to investors billions of dollars of what is now toxic debt. For all this wealth destruction, Fuld raked in nearly $500 million in compensation during his tenure as CEO, which ended when Lehman did. See the worst business deals of 2008. See TIME's Wall Street covers. In the lobby of Dick Fuld’s advisory firm a framed print greets visitors with a stark message: “That Was Then This Is Now.” A decade after presiding over the collapse of Lehman Brothers Holdings Inc., Mr. Fuld is still working on the second act of a Wall Street career that many predicted had also expired in September 2008. But as the anniversary of Lehman’s demise nears, friends and former colleagues say Mr. Fuld’s mind is on what happened during Lehman’s final days.
Mr. Fuld still occasionally seethes over the government’s refusal to rescue Lehman as it had many other financial firms under duress, though he believes time—and a recent book on the firm’s collapse—has helped prove that Lehman should’ve been saved. Mr. Fuld reserves his most pointed criticisms for his longtime rival, Henry Paulson, who ran Goldman Sachs Group Inc. before heading the U.S. Treasury during the financial crisis. Mr. Paulson and other key crisis-era officials have said that the government couldn’t lend Lehman enough to keep it solvent and that it needed a deal with a stronger rival, as Bear Stearns Cos. had found in J.P. Morgan Chase & Co. in March 2008. When no deal emerged for Lehman, bankruptcy was the best option, they’ve argued. Mr. Fuld declined requests for comment through several current and former colleagues.
The Sept. 15, 2008, collapse of Lehman made it the biggest casualty of the worst financial crisis since the Great Depression. Mr. Fuld was branded as one of the villains of that era, blamed for not heeding the warnings about Lehman’s risks and not securing a deal that might have averted disaster. The firm he once ran exists only as a shrinking knot of assets and legal disputes with creditors and counterparties. But there are signs that Lehman, the largest bankruptcy in U.S. history, is getting closer to winding down: The estate that manages Lehman’s assets has resolved all but $4.1 billion of the $1.2 trillion in claims brought against it since the filing. For his part, Mr. Fuld today spends his time running Matrix Private Capital LLC, a financial-advisory firm he opened seven months after Lehman’s collapse.
At Mr. Fuld’s new firm, a reminder to stay focused on the present has prominent placement. Photo: Michael Bucher/The Wall Street Journal
An Ed Ruscha lithograph, called “That Was Then This Is Now,” adorns Matrix’s lobby. On many days, though, Mr. Fuld sticks to a routine rooted in his past. Advice to his new staff often comes wrapped in a favorite saying: “If you have any doubts about what you’re doing, always fall back on the truth.” If Lehman comes up—and it does occasionally—it’s often as the backdrop to a story Mr. Fuld has shared on the way Wall Street used to work, those employees said. He reads a lot and is often eager to share what he’s learned with the people around him, says Carla Schiavo, who served as Mr. Fuld’s assistant at Matrix from 2010-14. Mr. Fuld makes the same commute from his longtime home in Greenwich, Conn., to midtown Manhattan, satisfying an itch to stay close to the financial system’s core. “I don’t think Dick Fuld is a person who could ever not work,” says Ms. Schiavo. Building Matrix hasn’t been easy, friends and former colleagues say. It had struggled to gain traction with clients, many of whom were wary of being criticized for working with Mr. Fuld.
Matrix tried its hand at other financial services, including real estate. Last year, the firm started managing money for wealthy individuals, while advising midsize—often family-run—businesses and investing alongside them. Friends say the wealth business is better suited to capitalize on Mr. Fuld’s longtime connections and relationships that withstood the crisis. Matrix has 16 employees and about $200 million in assets under management, according to a person familiar with the firm, up from $124 million last year. “He’s still searching for what the right objective of Matrix is, the right palette of activities,” says Peter Cohen, the retired chairman of Cowen Inc. who had been Mr. Fuld’s boss decades earlier at Shearson Lehman. “But he is upbeat, positive.” In the decade since Lehman’s demise, friends and former colleagues say, Mr. Fuld has grown more hopeful that history will agree with him on one important point about his past: Lehman didn’t have to die. A recent book on the subject piqued his interest, these people say. It was “The Fed and Lehman Brothers: Setting the Record Straight on a Financial Disaster,” written by Johns Hopkins University economics professor Laurence M. Ball. The book argues that Lehman had ample collateral to justify a U.S. government loan that would have staved off bankruptcy, rejecting statements from former officials that such a bailout would have been illegal.
Mr. Fuld, called to testify before a House panel weeks after Lehman’s 2008 collapse, said at the time: ‘I take full responsibility for the decisions that I made and for the actions that I took. … I feel horrible about what happened.’ Photo: Tom Williams/Roll Call/Getty Images “Have you read it?” Mr. Fuld has asked several former Lehman executives in recent months. Mr. Ball’s case closely mirrors arguments made by Mr. Fuld and other former Lehman executives since the crisis. “If you bail out AIG…why not Lehman?” asks Lawrence McDonald, a former bond trader at the firm who co-wrote a book recounting the bank’s collapse, “A Colossal Failure of Common Sense: The Inside Story of the Collapse of Lehman Brothers.” “Lehman only needed $32 billion,” he says, compared with $182 billion that the Treasury Department and Federal Reserve committed to stabilize insurer American International Group Inc. one week after Lehman’s demise. The AIG aid eventually was fully recovered. The notion that an academic had reached some of the same conclusions has given Mr. Fuld some measure of vindication, friends and former colleagues say. “He was very happy about Ball’s book,” says Tom Russo, a former Lehman general counsel who has remained one of Mr. Fuld’s closest allies. “As time goes on, the truth comes out. He feels, over time, that history will be accurate.” —Corrie Driebusch contributed to this article. Write to Justin Baer at and Gregory Zuckerman at Corrections & Amplifications |
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