Joe Gregory, the former president of Lehman Brothers and Dick Fuld's right-hand man until he was ousted in June, has put his Bridgehampton manse on the market. For $32.5 million, you'll get a 9,500-square-foot house with 8 bedrooms, 8.5 bathrooms and magnificent views of the Atlantic Ocean. [Real Estalker]
Since Lehman Brothers filed for bankruptcy on Monday, lots of people have wanted to talk to Richard Fuld (in a dark alley, preferably). But the Lehman CEO hasn't been seen in days. Now Rep. Henry Waxman has requested Fuld show his face before Congress next week to address "regulatory mistakes and financial excesses" that led to the firm's bankruptcy. Dick won't be required to appear, though, so we're guessing he'll elect to hide out in his bunker instead. [Dealbook]
♦ Fearing another massive corporate bankruptcy, the Federal Reserve agreed to an $85 billion bailout of the troubled insurance giant AIG. [NYT, WSJ, Fortune, NYP]
♦ AIG's CEO, Robert Willumstad, will be replaced by Edward Liddy, the former CEO of Allstate. [Marketwatch]
♦ AIG's ex-CEO Hank Greenberg is dismayed he wasn't involved in the bailout effort. Considering he's tangled up in about half a dozen lawsuits with his former company, that wasn't so surprising. [WSJ]
♦ Concern now seems to be focused on Washington Mutual: Federal officials have contacted Wells Fargo, JPMorgan, and HSBC to gauge their interest in a possible acquisition of WaMu. [NYP]
♦ John Thain and two of his deputies stand to make $200 million for the year they've spent at Merrill. [Bloomberg]
If Silicon Valley is mentally disconnected from this week's Wall Street mess, it's because ad-supported companies dominate the Valley these days. High-net-worth investors aren't reeled in with cheap banners, so the demise of Lehman Brothers or Merrill Lynch hardly pinches budgets. Lehman spent just $501,900 on ads, both online and off, in the first half of 2008. Merrill Lynch, which has a much larger consumer business, still only spent $38 million on advertising last year. Still, some 150,000 people will lose their jobs in this week's fallout. That's a lot of tech infrastructure no one will want to pay for anymore. Lehman, for example, spent $309 million on IT last quarter alone. What's more, Lehman's investment banking connections run deep in the Valley's world of startups, VCs and big company buyers. Below, five tech companies that find themselves wishing they could unleash themselves from Wall Street's fate.
Pride cometh before the fall, with Lehman Brothers having spent $309 million on information technology infrastructure in the quarter before the venerable financial firm went belly-up, which was up from $282 million the previous quarter. The company spent $1.1 billion on IT in 2007. Projects included a system for the London Stock Exchange to create an anonymous, automated way for traders to do business (which, in the wake of the United Airlines share price debacle, sounds like a fantastic idea). While the relevant divisions can be split off and sold (and the IT grunts are still hard at work), as more banks fail, selling IT equipment to financial firms doesn't look it's going to be a growth business for some time to come.
Here's a pretty edifice that neatly illustrates this market crisis: it's Canary Wharf Finance II, a skyscraper in London. It's the landlord of Lehman Brothers! Whose rent payments are insured by AIG, which is about to join Lehman in bankruptcy court. It is not a good time to be in the commercial real estate market right now. Just ask Lehman Brothers, whose $30 billion portfolio of commercial real estate backed securities is widely blamed for sowing the seeds of its demise. Politicians like to exploit the links between the market crisis and little exurban tract homes in foreclosure but this thing seems a lot more emblematic: its owner's stock has plunged by half this year as City of London commercial rents have fallen 27% and landlords prepare to compete with another four million square feet that broke ground when everyone in finance thought the money would never go dry.Also it is shaped like a penis. [Bloomberg]
Roughly a third of Lehman's employees will get to hold on to their jobs: "Barclays PLC has reached an agreement to buy the U.S. investment bank and capital-markets businesses of Lehman Brothers Holdings Inc. and as many as 9,000 Lehman employees will find jobs with the U.K. bank, according to people familiar with the situation." The deal will go before a New York bankruptcy court judge at 5 p.m. today; an official announcement won't be made until tomorrow morning. [WSJ]
Rumors: did they take down Lehman? This was one of those nagging questions to which we were too overwhelmed to answer yesterday. Now we know: Yes and no! On the one hand, as both rumormonger David Einhorn and pretty stiletto-wearing former Lehman CFO Erin Callan could tell you, that is how capitalism works. You short a stock, you start a word-of-mouth marketing campaign about how, say, "Lehman is the new Bear," which translates roughly to "Lehman is the new venerable investment bank whose demise those terrible short-sellers and their malicious rumormongering will turn into a self-fulfilling prophecy," and, lo and behold, the shit happens. Of course…it doesn't happen if your company has a sane and convincing leader who can go on CNBC and say, "here, look at our books! Our firm has such robust ratios of cash and hard tangible assets to covenants and other accounts payable that it really doesn't matter what our stock price does because, familiar as we are with the pussy nature of Wall Street confidence and the easily-distracted myopic ephemera-addled lemmings who govern such day-to-day fluctuations, we've seen to it to inoculate our business from such attacks by stockpiling enough hard currency and solid — but also liquid! — financial instruments that we can weather a crisis of confidence without having to undermine our case by begging them for money!" Lehman had no such leader. And it had no such assets!
As 158-year old investment bank Lehman Brothers goes down in flames, an angry employee is taking out his frustrations on eBay. A user going by the handle jmcclane92 is selling a "Lehman Brothers Nalgene Water Bottle (never used)," which he says Lehman CEO Dick Fuld told him was "unbreakable, but he also said that about our mortgage business 2 months ago. Caveat Emptor, I guess." Also for sale: a messenger bag, a gym bag, a hat and a Lehman Brothers guide to New York City. So far, our guy is up $170.25, which could buy him about 781 shares of Lehman stock.
We thought we'd check in with the chipper young woman who was answering Lehman CEO Dick Fuld's phone last week and see if she was keeping up her positive attitude. (Yes, there is someone still in the building picking up Dick's line. We wondered about that, too.) It seems like it's a different lady taking calls today. And she doesn't sound nearly as perky, which might have something to do with the fact that Lehman employees don't know if they're still getting paid.
The second most in-demand interview behind Sarah Palin? That would probably be Dick Fuld, the CEO of Lehman Brothers, who watched as the firm he led for more than two decades crumbled to pieces yesterday. Since rumors about Lehman's demise gained steam last week, Fuld has kept a low profile. Lehman employees didn't hear from him when the company filed for bankruptcy yesterday, he's been largely absent from the office in the last 48 hours, and according to the Wall Street Journal he's surrounded himself with a more elaborate security detail in recent days, which makes sense considering about 25,000 people would love to sock him in the face right now. So where is he? At his $10.82 million house in Greenwich, where he can always play a little tennis or take a dip in the pool to distract himself from the fact that his reputation has been ruined. After the jump, a tour of Casa Fuld!
No story about a bankrupt company is complete without the requisite "sad sack carries own crap out of office in boxes" shot, so of course every media outlet in the world was rolling tape or snapping pictures outside Lehman Brothers headquarters in New York Monday. TV reporters were doing their standups with the building in the background, so the average Joe watching at home would be able to say to his wife, "so that's where my securitized subprime mortgage is bundled with commercial-mortgage-backed securities into a mark-to-model collateralized debt obligation!" Over-extrapolating from the financial fortunes of others is precisely what got us into this mess in the first place but, but on the other hand you can't expect people not to stare at pictures of anyone potentially in the process of becoming a hobo. Watch the media watch the (maybe) new poors in the gallery after the jump.
One thing that is difficult about capturing the pathos of this Lehman crisis, aside from the obvious fact that media people are to the prospect of unemployment as Michelle Duggar is to the prospect of having to wet nurse something, is that Lehman employees seem so intent on having a good time. Ten thousand or so bankers (like the photogenic London based couple pictured here) will lose their jobs, and already there are like 296 Craigslist ads up now offering casual sex to be performed on/by them. And none of the ads seem clever enough to be fake! (And we even adjusted our creativity expectations downward in accordance with industry norms; for instance, if this guy asked if you wanted to get licked like, say, a hamburger, we might be suspicious.) Then there are these guys…
In the event you haven't yet seen this clip from CNN this morning and you're either a) really depressed about the demise of Lehman Brothers and need a little cheering up; or b) you get really turned by watching unattractive men going at it on the streets of Manhattan, have a look at this clip of some on-camera shenanigans outside the offices of Lehman Brothers earlier today. [The Observer now reports it was a prank for Howard Stern's show.] Video after the jump.
Not surprisingly, the demise of Lehman Brothers is keeping plenty of people busy on Ebay, where a long list of Lehman-related items can now be yours, assuming you're actually willing to pay good money for a ratty, sweat-stained baseball cap. But you can always think of it as charity. Since some of these ex-Lehman employees may not be working for a bit, buying their junk might just help them put food on the table until another job rolls around. Some of the items up for grabs:
Looks like it was both a wonderful weekend and a terrible weekend for Serena Torrey, the PR princess of New York magazine and daughter of James Torrey, the prominent hedge fund manager and mega-fundraiser for Barack Obama. The good news: On Saturday, Serena tied the knot with Ted Roosevelt, the great-great grandson of Theodore Roosevelt. The bad news? He's a vice president at Lehman Brothers, which means he's likely out of a job as of this morning. We're guessing it won't be too tough for a man with Ted's pedigree to find a new job. If all else fails, he could have Serena put in a good word with New York's owner, Lazard chief Bruce Wasserstein. Or he could join his father-in-law on the Obama fundraising trail, which just announced that the campaign reeled in $66 mil. in August. [NYT]
