Later On

A blog written for those whose interests more or less match mine.

Notes from the Downfall

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Via Liz, an article on how one trader enduring the Lehman collapse. It begins:

The ’97 Barbaresco was not supposed to be opened for this. Stashed under a desk on the third floor of Lehman Brothers’ Seventh Avenue headquarters, the bottle awaited an appropriate victory. Like food, wine pairs well with vast sums of money.

But on Friday, September 12, as Lehman’s stock flatlined at $3.65 per share, the Trader knew it was time to uncork the Santo Stefano. He was in his late thirties, at the prime of his earning potential, a standout in one of Lehman’s profitable trading divisions. When the stock price had fallen below $20 a share in July, the Trader knew things were bad but took solace in the prospect of one more bonus cycle. Things are bad; things will be bad for a while. We’ll hunker down and survive, he had thought then.

But the fact that the Trader’s desk met its targets in August meant nothing at Lehman, where cascading losses from a few epic bets on commercial real estate triggered a firmwide meltdown. As one recently laid-off Lehman staffer said, in characteristic Wall Street vernacular, “These assholes on another floor completely dropped our pants.”

Around 5:30 p.m. on Friday, as the reality sank in, the Trader assembled his staff. With the weekend looming, this would likely be the last time they would gather at Lehman as a team. The eight colleagues, friends really, stood around glowing Bloomberg terminals as the $700 Barbaresco was poured into paper cups. A crowd formed. Champagne was brought out. What they didn’t know was that upstairs, Lehman lawyers and bankers were negotiating with counterparts at Barclays, Bank of America, and the Fed, piecing together a deal. After a few minutes, the Trader was called over to open the books for the counterparties. He brushed his teeth, scrubbing the scent of wine from his breath. Leaving work at nine that evening, the Trader knew that Lehman Brothers, as he’d known it, was at an end. The culture would change, inevitably. But at that moment, he couldn’t conceive of the firm’s actually going bankrupt.

The Trader had come to Lehman only a year ago, after …

Continue reading.

Written by Leisureguy

29 September 2008 at 10:28 am

Posted in Business, Daily life

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