COEUR DEFENSE

Eight days ago I flew out of England, a country where I wrote A Colossal Failure of Common Sense with the original Great Brit, Patrick. His house is like walking into an old Constable painting… local villages… horses trotting along narrow country lanes… 16th century pubs surrounded by acres of farmland. It’s hard to imagine places like that exist when you live in Manhattan.

But I was going to France now, to Louis XIV’s great Château of Versailles. I waited until the sun had set behind the ramparts of the 18th-century palace, and then I asked Anabela to be my wife. When she accepted, I thought I was the Sun King. I mean, not many former pork chop salesmen get that lucky.

I had one more stop before we could head to the beaches on the French Riviera. And it wasn’t a normal spot for a tourist. Having come through the most important aspect of this European trip, I settled down to make a pilgrimage, and I dragged Anabela away from the galleries and the museums and the paintings she loves, to a stark and terrible modern complex of towering, intimidating, modern offices, a place which contains the biggest office block in Europe. The place is called La Defense, a gigantic square. We’re talking Yankee stadium times twenty, with a gigantic arch about twice the size of the Arch de Triomphe. But the place I had come to see was the biggest building in the biggest square in all of Europe. It’s name was Coeur Defense, a gleaming glass testimony to the devastating folly of the 31st floor of the former at Lehman Brothers.

Coeur Defense looks like two upside down tennis ball tubes, except it’s over 500 feet high, and it represented possibly the most catastrophic loss ever perpetrated on one corporation involving the lunatic purchase of one building. Coeur Defense was built in 2001 for $886 million. Three years later, when Goldman Sachs’ Whitehall Fund bought 51 percent, the building was valued at $1.8 billion. Three years later, cocky, cock-sure, lurching their way to immortality with a balance sheet which would shortly take down the world, Lehman Brothers strode into La Defense and bought the building for $2.8 billion, more than double what it was actually worth.

Richard S. Fuld, the most ambitious, and least reliable of all the Shadow Bank Chairmen, had struck again. He’d sent his blue-eyed boy, his personnal property czar, into battle again. And once more, Mark Walsh had brought home the bacon - the biggest office block in Europe. But with a balance sheet like we had at the time, what the hell we were doing buying office blocks 30 miles from Paris, God alone knows.

Following the bacon home, came the roosting chickens, and it swiftly became apparent that Fuld and Walsh had walked into a financial blitzkrieg. The property market both in the United States and Europe had crashed, and very soon the two of them had to survey, gloomily, the mamoth white elephant they had bought… for $2.8 biilion!! It wasn’t worth it, it couldn’t be worth it.

And now I stood before it, holding my new fiancee’s hand, staring up at the rounded glass edifice, the one which cost Lehman one thousand, five hundred million dollars. It was strange standing there, almost a year after the bankruptcy. I placed my hand on the mirrored glass exterior. I looked around the huge square, and there were probably a hundred and fifty people hurrying around this huge complex.

None of them knew what Lehman Brothers meant to me. None of them would ever know how badly I had taken the Lehman catastrophe. I stared into the glass panelling at street level, and I saw again the haunted face of Richard S. Fuld. And along side it, I suppose I saw the frowning faces of Mike Gelband, and Alex Kirk, and the rest. All of them imploring our Chairman to pull back, to stop it, to get out while we could, to walk away from this overpriced piece of French posturing.

Le grand. La premiere. Le miellure… yeah right! At $1.3 billion, not $2.8 billion as our half crazed expansionists believed it was worth. Jesus Christ, I could have got really upset just standing there. But I turned again to Anabela, and debated the possibility of trying to explain what I felt. But in the end, I said nothing. What would have been the use? No one will ever understand how much it all still matters to me.

I’m coming home tomorrow, back to New York, and as soon as the car starts to drive through those great canyons of the city, I shall again be tempted to sink into the shadows and into the memories of the bank that I loved. I expect Anabela will shake me out of it, but this time it will be just a little bit harder, because on the outskirts of Paris, I walked in the footsteps of the most reckless property department in the history of Wall Street… the Flash Harry’s of Lehman Brothers, the boys whose money wasn’t real, the boys who were about as smart at valuing gigantic office blocks as my uncle George’s labrador.

Best wishes to you all,
Larry

Lawrence made $37 million for Lehman Brothers in 2007 shorting the subprime market. He is also the New York Times Bestselling Author of “A Colossal Failure of Common Sense - the inside story of the collapse of Lehman Brothers.”

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