Poor little Lehman Brothers Inc. Despite announcing on June 9 plans to raise $6 billion in new capital, the media continued to write the firm's obituary, or at least remind readers that Lehman and CEO Dick Fuld are not out of the woods yet.
Fortune managing editor Andy Serwer was one of the first to throw stones, posting an entry to his infrequently updated Captain's Blog only hours after Lehman unveiled its capital raise and its historic $2.8 billion quarterly loss. "A big question I have is how responsible is CEO Dick Fuld and the rest of the senior Lehman management team," wrote Serwer.
"Are they to blame for the mess that this venerable firm is now in? Or was it inevitable that [Lehman] fell into this sort of ditch? Quick answer: I'll take #1 please, which is to say, it is management's fault." (A few days later Fortune posted a Web story blasting Lehman.)
Why? Because Fuld "intentionally positioned the firm" as a bond house, Serwer wrote, believing he and his team "could handle this positioning." What Serwer doesn't say is that he believed this, too. In April 2006, Serwer penned an upbeat feature on Fuld whose headline said it all: "The Improbable Power Broker. How Dick Fuld transformed Lehman from Wall Street also-ran to super-hot machine."
Part of "Fuld's magic," Serwer explained, was "to ignore doomsday predictions that Lehman was too focused on bonds." Now we don't point this out to engage in gotcha. After all, in 2006, Fuld was on the right side of a wave; today he's clearly on the wrong side. And we can't expect Serwer or any other journalist to be any better than anyone else, including Fuld, at predicting when that wave will turn.
But why not fess up? Blogs allow journalists to talk directly to readers in unstructured ways. Why couldn't Serwer say in his blog, "A couple of years ago, I wrote something of a valentine to Fuld; now he's disappointed me." Instead, Serwer engages in the kind of revisionist history the media so often resorts to when covering the ups and downs of Wall Street titans. (Another example: Stan O'Neal's transformation from turnaround genius to mean-spirited dunce.) "As far as where Lehman stands today, if it isn't Dick Fuld's fault, whose is it?" Serwer wonders.
Fortune isn't the only outlet to cope with once-happy coverage of Lehman and Fuld. In October, The New York Times ran a lengthy -- but impressively nuanced -- feature on Fuld in which he was dubbed "The Survivor." Written by Jenny Anderson, the story came later in the cycle than Serwer's 2006 offering; by the time it appeared, Merrill Lynch & Co. and Citigroup Inc. had already taken huge write-offs and Bear Stearns Cos.' earnings were plummeting. So the piece, though laudatory of Fuld and the performance of Lehman -- at the time, it appeared to be steering clear of credit problems -- was carefully hedged. Phrases like "at least thus far" and "at least for now" peppered the copy and potential problems, including Lehman's size, were discussed.
And when the Times weighed in on Lehman's stunning loss announcement last week in a piece Anderson co-authored, it dealt with its previous bullishness head-on (unlike Serwer): "The developments mark a stark reversal of fortune for Lehman and for Mr. Fuld," who "earned accolades" for "steering Lehman through tumultuous markets last year," the story informed near the top. Like most stories on Lehman last week, the piece recapped everything the firm had been through and warned that despite the capital raise, the worst may not be over.
Still -- and this is symptomatic of our times -- the piece seemed to attract the most buzz for a strange little anecdote at the end about Lehman president and COO Joseph M. Gregory showing up "in an unfashionable green suit" and Fuld marching him "from office to office on the 31st floor" in search of laughs. "In Tough Times, Dick Fuld Keeps the Focus on Fashion" read a snarky post on New York magazine's Daily Intel blog. By the end of the week, however, the Times' anecdote seemed more prescient than funny. Gregory was out of a job and CFO Erin Callan, whose personal shopper was recently quoted in the Wall Street Journal, was shunted aside. Observed Daily Intel: "We joked at the time that their flamboyant fashions might affect their job security, but we had no idea we might actually be right."