The Good People at the ‘Bad Bank’

(Bloomberg Opinion) -- Bloomberg Opinion marks the 10th anniversary of Lehman’s bankruptcy with a collection of columns from around the world. Read more.

I worked at Lehman Brothers Holdings Inc. when it collapsed a decade ago. My last job there was as a trader specializing in index arbitrage and exchange-traded funds. My first job? You could say I was an accidental security guard. It wasn’t glamorous, but that’s where I quickly learned what it meant to be a Lehmanite.

I was part of the incoming associate class of 2001, and just as we were about to be assigned to our permanent roles, terrorists struck the World Trade Center on Sept. 11. Lehman’s situation at the time has largely been forgotten over the years. The firm was located across the street from the World Trade Center at 3 World Financial Center. When the twin towers collapsed, they grazed Lehman’s headquarters, rendering it uninhabitable.

After the attacks, the firm moved its investment bankers to the Sheraton hotel in midtown Manhattan, and the trading floors to the firm’s emergency backup location in Jersey City. Suddenly underemployed new associates such as myself were assigned jobs as security guards in the elevator banks. People were plenty jumpy back then, and the idea that a rogue terrorist strapped with explosives might try to take an elevator up to a bank’s trading floor was not so far-fetched. I may have had degrees in math and computer science to go along with an MBA, but I took my job as a security guard seriously.

I repeatedly signed up to stand watch outside the equities floor because that’s the department I wanted to work in, and I hoped to be able to make an impression on someone who might be able to make that happen. My days were pretty much what you would expect — lots of checking of IDs, long stretches of time when nothing happened, and a fair amount of listening at the door to try to catch snippets of traders conversing so I might learn something. 

The thing about a busy trading floor is that it has a certain sound. There is lots of yelling, but yelling about money sounds a lot different than yelling about other things. There is a certain urgency to it. One day the sound changed — it became anguished. That day I overheard talk of a plane crash. It was Nov. 12, 2001, and American Airlines Flight 587 had just taken off from John F. Kennedy International Airport bound for the Dominican Republic before crashing in a Queens residential neighborhood with 255 on board. 

It was ultimately determined that the crash wasn’t the result of an act of terrorism, but nobody knew that at the time. The first thought was that terrorists were again responsible. But I noticed something unusual on that trading floor that taught me a lesson in the culture and essence of Lehman. Rather than becoming unnerved at the news of the plane crash, those traders became visibly angry. Furious. They were ready to fight. I stopped checking IDs. There was no way a lowly associate was going to get in their way.

That was Lehman. The toughest bank on Wall Street. This wasn’t a white shoe firm like Goldman Sachs or Morgan Stanley. It was made up of survivors and street fighters. It was a firm where those lacking an Ivy League pedigree — like myself — could get a shot and succeed.

Many people forget that Lehman in its 100-year history had been on the verge of collapse at least four times: first when the stock market crashed in 1929; in 1973, when the firm lost $6.7 million betting on interest rates; in 1984, when internal dissension led to a takeover by American Express Co.; and in 1994, when newly independent Lehman faced a capital shortage. The firm’s recovery from the 1998 Russian debt default and the meltdown of hedge fund Long-Term Capital Management was the stuff of legend. 

Say what you want about Chairman and Chief Executive Officer Richard Fuld, he turned a money-losing bond trading shop into a full-service investment bank with a market capitalization of some $60 billion. When he threatened to overtake Goldman Sachs and Morgan Stanley, the threat was credible. 

It was a tough place to work, and certainly not for the faint of heart. Although the name “Lehman Brothers” has become a bit odious, there are many proud ex-employees who had no role in the firm’s collapse that populate the upper echelons of high finance today. Lehman people were good people, and that shouldn’t be forgotten. 

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Jared Dillian is the editor and publisher of The Daily Dirtnap, investment strategist at Mauldin Economics, and the author of "Street Freak" and "All the Evil of This World." He may have a stake in the areas he writes about.

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