Explaining the Lehman Culture Clash
"I understand why the British are livid," said a friend (American) who is high up at Lehman. My friend was talking about the Sunday front page headlines -- screaming that a $2.5 billion bonus pot was being retained -- from the English bankruptcy court -- by Barclays to pay eight US senior executives who had reportedly been guaranteed $10 - $25 million salaries for two years.
All last week I'd been hearing two completely different stories from friends at Lehman here and Lehman in London.
Here, it was -- and is -- a roller-coaster as employees start interviews today with Barclays. But, last week, the Lehman executive committee briefed department heads as early as Monday that there might be a buyer, and department heads spread the news. They were able to do this because certain assets like the broker/dealer business had not yet filed for bankruptcy. Had Barclays not come to the rescue they would have done so by Tuesday night.
In other words, yes, US employees lost a lot of money but lines of communication were open. Now, US employees still have jobs, benefits, fully paid expenses -- or the promise of a decent severance package.
But in London, sources yelled angrily down the phone it had been an entirely different story. They had filed for bankruptcy, and, they way they saw it, their cash-flow had been taken and reallocated to New York -- for which they are suing.
And, unlike in New York, there had been no communication, other than from the administrators Price Waterhouse Coopers. People who'd been working abroad at the weekend were stranded -- and told to pay their own flights home. PWC told them to show up if they wanted to get paid for the month.
"It just made us feel that in the end the Americans just looked after themselves and shafted us," one British executive at Lehman London told me. "All this talk of 'we are one bank' had amounted to nothing." Unsurprisingly, many British employees didn't show up for work.
Over here, their peers think the Londoners' reactions have been understandable but not thought through.
"British bankruptcy laws required that only PWC tell London what was going on all last week," says a US employee. "Lehman management wasn't allowed to. The same would have happened if all US Lehman had filed for bankruptcy Sunday night."
Finally, my source says that British should not overreact over to the alleged $2.5 billion bonus pot and the reallocation of the money, since without it the Barclays deal would not have happened.
The eight executives to whom the $2.5 billion has supposedly been offered -- a fact not confirmed by Barclays or Lehman -- are "leaders" in the firm who will need the money as incentives to keep their teams in place. "They are senior, but not senior senior people, whose retention is crucial to the Barclays deal."
"We are all being headhunted like crazy," says my source. "It's understandable Barclays would want to give us an incentive to stay -- none of the eight would keep the money from themselves." Eric Felder, head of Fixed Income, was singled out as a scrupulous and fair man.
"Finally," says my source "There is talk that Barclays -- among others, including Nomura -- wants to buy Lehman London. So, yes, the idea of $2.5 billion bonus pot will add insult to injury in the UK, but London employees there would be smart to stop whining -- and show up to work. After all, the value of the business is in the people. If they're not there, there's nothing to buy."
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Sleep with the dogs and wake up with the fleas.
The Brits are finding out about Republican Economic theory, the hard way. However, no U. S. money should be used to fund or bailout any foreign bank or institution, period.
How do you justify British investors money (the 2.5b) being taken to fund the Masters of the Universe in New York? Bad enough they steal from the US taxpayers but do they have to completely destroy all hope of recovering American credibility abroard? Who do you think will ever do business with American firms without taking the money upfront, in gilt edged stock and secured in such a way that the thieves cannot transfer it back? This is nothing more than theft, but as the world now expects nothing else from American business there is probably nothing to be done.
Well, they went along with Bush too. they surely knew that a coup had happened in America. Now they want to whine about how they lost money throwing in with crooks and liars? Well, we're all hurting and they exercised really bad judgment too.
Personal Responsibility!!!!
They went along with Bush too? Only US citizens can vote for president. Fact.
The funds referred to in the article were Lehman London office earnings in billions of dollars that were transferred to the Lehman New York office late on Friday night. Fact. Leaving nothing to pay outstanding London salaries and expenses. Fact.
So lady, for your own self-respect - get your facts right - do not open mouth until brain is engaged.
Take it as a personal responsibility!
the limey should have studied american corporate greed 101. read the shock doctrine
When Lehman started hiring members of the Bush Crime Family... like former president George Herbert Walker Bush, or former Florida Governor Johnathan Ellis "Jeb" Bush, or their cousin George Herbert Walker... well, their demise was pretty much written on the wall.
They might as well have given all their money to Neil "S&L" Bush and save themselves a whole lot of time and heartache.
I'm going to start short-selling any company which hires anyone in the Bush Crime Family. It will eventually pay off huge- that's a guarantee.
Yes, London got a taste of what we've been experiencing for years. Repub-lie-cans will say anything -- do anything -- to get what they want. And if they can f*** the other guy on the way out the door -- all the better. Welcome to the party!
Well, I hate to say this but no one really cares all that much what happens to Lehman employees. They enjoyed the ride while they were there and now they have to take the consequences.
They remind me of a friend's wife who worked for one of these home morgage company's that made bad loans to poor people to buy houses they couldn't afford. What did she do? She made up all the bogus documents that said these people made more money than they did and worked for companies that did not exist, and had assets they didn't. She knew that what she was doing was illegal and morally wrong but she needed the job so her and her husband could live like they were rich folks. She thought it was terribly unfair when she went to work one day and the doors were locked and she was owed a moonths worth of pay. Too bad she isn't facing criminal charges too!
Seriously, read this:
"The eight executives to whom the $2.5 billion has supposedly been offered -- a fact not confirmed by Barclays or Lehman -- are "leaders" in the firm who will need the money as incentives to keep their teams in place. "They are senior, but not senior senior people, whose retention is crucial to the Barclays deal."
Sorry... I'm rolling on the floor of my house laughing hysterically while I still have the chance before my house is foreclosed on.
These people are "leaders", "senior" people. "Senior" enough to get $2.5 Bilion thrown at them - but NOT "Senior" enough to have had any responsibility in this disaster?
Looks like nothing's changed.
Exactly,,, tell me why the American taxpayers should throw good money after bad money...
If they were so darn good, then why did the company go belly up????
As I learned the hard way two years ago, it is the human capital that counts the most. Without talented people, a services firm can go nowhere. If a true effort is made to save any of these financial firms, the decision makers/ buyers need to be certain the best and brightest stay committed or the value of the firm decreases significantly. Of course their is a price to this, and it is a free market competition to hire these guys and girls.
After all, employees act within regulation, and regulation is tightening. To assume mistake-makers will make the same mistakes at a new company is not accurate.
Tom Poser
http://www.sanfranciscotenantrep.com
True, but I'm no so sure it applies in this case. I'm a little dubious of the claim, "No one saw this coming.". Keeping good people IS paramount, but keeping greedy and selfish people is a bad idea.
I really don't believe this is all "honest" mistakes. If your bonus is $100 million and you think maybe something is going wrong with the company, you're going to keep your mouth shut. Can't say I wouldn't have done the same.
Greed caused this, pure and simple. They can talk in circles all they want, this was caused by GREED.
I'm quite sure they didn't see it coming! They didn't want to see it coming. And if either one of those is true for a fact, then they are also the last people in the world you would want to be in charge of anything. It was their job to see any thing that was coming down the road. They were in it for themselves!
Hilarious! In the 80s and 90s we were told that the reason the CEOs got their millions was that the stock prices were soaring, so it was justified by the great leadership these people were showing. When the stock bubble blew at the end of the 90s most stocks tanked... but the CEOs kept getting their huge bonuses. Why? I actually read someone somewhere writing that, since the stocks were so poor, we had to pay more for the CEOs as an incentive to keep them working for such horribly poor companies. In the above story that 'incentive' reason is floated again...
Oh, American, sheeple, when will you learn?
$2.5 Bil for the "leaders" in the firm? Is that a joke?
The fact that they 'won't keep the money for themselves' is a joke almost as funny as the first.
This is why these types of things happen. EVERYONE washes their hands,
"I wasn't in charge of that! Not my fault!"
Here's my solution: Everyone at Lehmen's, AIG, all these banks that made over $150,000 should be IMMEDIATELY dismissed.
Right now it seems like a CYA clusterf***, everyone grubbing and grabbing for their share of the shakeout, and, as usual, when the smoke clears, the public will be the ones who get shafted.
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