“…the story of the firm’s failure as told through the perspective of a group of in-house dissidents who saw disaster approaching back in 2005 and tried repeatedly (and vainly) to warn CEO Dick Fuld. One of the most compelling of the current crisis chronicles and possibly the most engagingly written.”
–New York Magazine

“…poignantly told… from an insider [who] witnessed, often in amazement and disgust, the corporate dysfunction and hubristic leadership that led to [Lehman's] demise.”
–BusinessWeek

Booking Agent: James Robinson at IPG, llc.
t:- 1-617-549-9849 (USA)
e:- james@lawrencegmcdonald.com

Fee Range: Available Upon Request


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SPEAKING TOUR REVIEW: Bowling Green State University heard “how Lehman Brothers was a deadly domino.”

WRITTEN BY BY JENISE FOUTS SENTINEL STAFF WRITER
FRIDAY, 25 SEPTEMBER 2009 10:31

As a historic, trustworthy investment bank, Lehman Brothers survived the Civil War, Great Depression, two world wars and even Sept. 11, 2001. But it couldn’t survive what it had become in recent years, an “out-of-control monarchy” and an $800 billion “deadly domino.” (Photo: Former Lehman Bros vice president Lawrence McDonald speaks to students at the Bowen-Thompson student union at BGSU.

Those images were used in talks Thursday by Lawrence McDonald to describe his former employer. Once a vice president at Lehman Brothers, he was admittedly “taken to the woodshed and shot” well before the firm filed for bankruptcy on Sept. 15, 2008, sending tsunami-type shock waves around the world and through its markets.

McDonald is now the author of “A Colossal Failure of Common Sense: The Inside Story of the Collapse of Lehman Brothers,” which was published in June - specifically for readers “on Main Street” - and is already #7 New York Times best seller list.

He spoke about the content of his book and what can be done to change the banking system to a packed room of students, faculty and community guests in the Bowen-Thompson Student Union. McDonald was the speaker for the fourth Ed and Linda Reiter Lectureship, with its theme of “Ethics and Values in the Workplace.”

“The story of Lehman Brothers really comes down to one sentence: 24,992 people making money, and eight guys losing it. Literally, eight people,” McDonald said earlier in the day to media members. “I decided to write this book to expose the few who hurt the many. … I’m not letting this disaster go without being told.”

Over the winter months McDonald worked 17-hour days on research, talking to scores of former Lehman Brothers’ managers and employees, sometimes doing up to 16 interviews a day. Random House blitzed the book through to publication, and McDonald is now doing interviews on national television and with journalists from around the world.

He punctuated both talks with imagery, describing an investment bank like a “767 with 18 engines,” which pushed out “brilliant … Tiger Woods Hall of Fame risk-takers” and squashed them “like grapes.” McDonald pictured Lehman Brothers as a 3,000-foot rocket with astronauts in control from a bye-gone era, flying it 175 miles per hour “into the largest subprime iceberg ever seen.”

A “perfect storm of horrible, horrible things that came together” brought the company down. Its subprime mortgage values jumped from $400 to $600 million in 2004 to $3 billion in 2007, which it couldn’t sell because all investment banks were trying to sell theirs, too.

Blue-collar workers earning $50,000 a year were given mortgages for $300,000 homes, and many people were not even making their very first mortgage payment.

When “revolutionaries” in the company, including McDonald, tried to expose the dangers, they were pushed out of the firm. And federal agencies, such as the Securities Exchange Commission, were so fixated on looking for the “next inside trader, the next Ivan Bosky,” they failed to see what was happening.

“Our government allowed Lehman Brothers to cause a deadly danger, an $800 billion domino. When it fell, it hurt so many people around the world.”

McDonald urged changes be made in the banking system today, including breaking up large firms like Bank of America. Smaller banks lend themselves to transparency, while large banks become “black boxes.”

He said Richard Fuld Jr. had no business being both chief executive officer and chairman of the board, causing Lehman Brothers to become an “out-of-control monarchy.” AIG also had a dual CEO/chairman of the board.

In addition, McDonald noted Fuld’s friends served on the board, including a Navy admiral and an actress who’d been in a movie with Spencer Tracy who died in 1967. “How is she supposed to be looking at risk?” he asked. Instead of the board acting as the bank’s anchor or brakes, it refused to ask any questions about “financial weapons of mass destruction.”

Instead, “you bring in financial experts, and you pay them.” And they meet, not six or seven times a year, but 30 to 60 times a year “to protect us all.”

He urged term limits on CEOs and board members, with the latter serving at different banks when their terms are done. McDonald also wants financial incentives for government agencies to uncover fraud and unsafe banking strategies.