Sympathy For The Devil [the Informer] - Dylan Young - Sharp - Dec2008

  
   
 

BIG IDEAS FOR A RICHER LIFE

Sympathy for the Devil Dick Fuld really isn’t such a bad guy.

Sure, he’s at least nominally responsible for the biggest bankruptcy scandal in banking history. He feasted on the subprime market until it folded in on itself and ripped the economy a new bottom line. He set the tone for a Wall Street culture that rewarded ruthlessness and bullish behaviour with a lifestyle of tawdry wealth and taste. He set new standards in ethics-lite investment practice and paid himself over $480 million in his seven years as CEO of Lehman Brothers Holdings. And when the company tanked, he washed his hands. Okay. So he sealed his fate. He was a mover in the credit crisis and a baron of the subprime loan and now he’s the poster boy for the global economic meltdown. Maybe he does deserve to be the target of every Tom, Dick and Henry—Waxman in this case—with a beef to grind and a box to soap. But there’s something rank about him being dragged in front of the House Committee on Oversight and Government Reform to be berated and bullied into apologizing for doing little more than what he was contracted to do. It’s not as if people were clueless about the dangers. They knew the stakes and were willing to risk them, because they saw the pot of gold at the end of the earnings report. Fuld was given a mandate to screw the market for every penny he could get. For six and half years that’s exactly what he did. And he was loved for it—by the market, the hedge funds, the executives, the pension plans, the shareholders, and the press. But these aren’t the fairest of fairweather friends. The instant Lehman Bros. started to go south, Fuld had to know he was going to wind up taking it in the neck. In early 2008, he forwarded a proposal that might have kept Lehman Bros. out of the knacker’s yard but the investors flinched and the blitzkrieg raged—bankruptcy, bailout, fire sale, you name it. Fuld had killed the very company where he had risen from an intern 42 years earlier to a corporate general’s rank. And CNN, which had lauded him as the 1 CEO of 2006, put a warrant on his head as one of their 10 Most Wanted: Culprits of the Collapse. 74 Sharp Dec/Jan 2009 SHARPFORMEN.COM

Now, I’m not about to write a treatise on the nature of greed or pontificate on the volatility of the marketplace—not for the moment anyway. Just take it on faith that if the free market thrives on liquidity, growth and deregulation, then it’s bound to be fertile ground for a wide variety of prettily coloured sins, greed just being the most obvious. And for every upswing of fortune, there will be a violent downturn to balance it out— free markets go into free fall. Knowing that doesn’t seem to make a difference though. That’s what’s puzzling about the nature of the game. When things start to go wrong, we look for answers. And by answers, what I mean is someone to blame. Who better to point a finger at than the cigar-chomping fat cat? But in our hurry to find the designated villains of the so-called collapse, it’s easy to forget that Fuld and his Wall Street cronies aren’t so much the problem as simply the most extreme product of it. Granted, Dick Fuld probably isn’t a nice guy. In fact, he’s probably a bit of a bastard—and probably a poor tipper as well. And it’s damn near impossible to sympathize with someone who pulled down half a billion dollars while betting against a market disaster with other people’s money. But that’s what the CEO of an investment bank does. Men like Fuld capitalize on risky investments because the companies they work for encourage them to. The companies encourage this practice because the system allows it. The system functions this way because the governments build them that way. And the government builds them that way because that’s how people tell them we want it—that’s what they voted for. It’s all just a little too easy to pick on the wheelers and dealers. Maybe they are overpaid and self-indulgent. And maybe they are dangerously reckless and lost in a culture of excess. As long as they’re making people money, no one cares whether they’re unscrupulous opportunists or high-minded philanthropists. But god forbid they drop the ball and expose us to the vicious flipside of escalating wealth. No. It can’t all be laid at their door. We’re all in need of some restraint. Ask me who killed the economy, and I’d say, after all, it was you and me. DYLAN YOUNG ILLUSTRATION: ROCCO COMMISSO

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