wnyc.org / 93.9fm / am 820

This book is simply painful to read. Not because it is dealing with the collapse that affected so many people, but because it is so terribly written. The one thing that becomes clear -- this author cares more about promoting himself than about telling the story. Everything is about him and how great he is. He was one of thousands of vice presidents and was laid-off six months before Lehman filed bankruptcy. He pretends that he was an insider, but is so far removed from any of the key players. And some of his facts are just wrong.

Save your money. A number of other Lehman books by real journalists are coming out soon. Save your time and money for them.

Lawrence McDonald hyperventilates that "At the top of the market in 2007, [Lehman's] net tangible equity was $17 billion versus its total investments around the globe of $750 billion. That’s a leverage of 44 times revenue!" Well, actually that's a leverage of 44 times times net tangible equity, NOT revenue. McDonald tells a breezy story, but comments like his mangled leveraged revelation just confirm what a naif he is and why what was going "on one of the most mysterious places on Wall Street - the 31st floor at Lehman Brothers" wasn't really that mysterious to so many others on Wall Street that actually knew something about financial analysis and financial firm management. It seems like McDonald ultimately developed some good sources in Lehman after he was fired - too bad he didn't have the intellectual framework to process it all into a coherent analysis.

I wrote A Colossal Failure of Common Sense to expose the few that hurt so many.

My estimate is that 2 million of lost jobs are at least the indirect result of the failure of Lehman Brothers.

The litany of ills is now all too familiar: families losing their homes; college tuition (even at state schools) becoming out of reach for many; recent graduates having a tough time finding work, (perhaps starting to think it has something to do with a personal defect, rather than the fallout from an economy that has spun out of control) business owners (neither able to make payroll nor pay suppliers) having to close their doors.

The pain out there is real and personal.

Many of these problems can be traced to the collapse of Lehman Brothers; and the cause of that collapse was centered on one of the most mysterious places on Wall Street - the 31st floor at Lehman Brothers, the floor where top executives presided.

If I have one key message I want the world to know it is simply this: The failure of Lehman Brothers did not have to happen.

Many will find this a surprising point-of-view. After all, wasn’t the Lehman bankruptcy the largest ever? Bigger in fact than Enron, WorldCom and Adelphia combined.

Even by Wall Street standards, Lehman was wildly, crazily overleveraged. At the top of the market in 2007, its net tangible equity was $17 billion versus its total investments around the globe of $750 billion. That’s a leverage of 44 times revenue!

Despite this astonishing degree of leverage the bottom line is that the collapse of Lehman Brothers should never have happened!

The plain and simple fact is that Lehman Brothers was not rotten at the core; she was rotten at the head. The head was ugly but the core of the firm was beautiful.

McDonald seems like a reasonably smart fellow, but he does sound more than a bit naive (self-congratulatory, as well) to think that he was surrounded by "geniuses" (there are a number of very smart folks working in the derivatives space, but Lehman had only a handful of them). I am glad he wrote the book and am looking forward to reading it.

It's pretty clear that CEO Dick Fuld had been out-of-control for years and had juiced up LEH earnings through reckless bets on illiquid assets on a balance sheet burden with absurd leverage and minimal liquidity. And he really had that "plausible deniability" thing (so beloved among white-collar criminal defendants) down pat.

So I suppose one should be grateful that now, after the damage of that slow-moving train wreck has become manifest, McDonald is at least beginning to understand, and speak up about, what he and his fellow "geniuses" enabled, and smugly participated in, to their great monetary advantage.

Such ex post facto insight and temerity (however modest and untimely) by McDonald is extremely rare, and is to be applauded, among ex-Lehmanites.

By the way, I didn't hear the end of the interview - to what charity are the profits from the book being donated by McDonald ?

The guest's summary that the owners of the stock who were none the wiser were not hurt is collosal bunk. Potential gain from was stolen from the owner by the brokerages who loaned out those stocks and given out to basically what amounts to gamblers. These same brokers would and still do demand huge bonuses if their money or stock was used--wait, they are being paid when they allow others property to be used! That this sot can still say that the owners of the stock weren't hurt demonstrates deceit, theft, and calculated hubris this guy still condones as he supposedly is trying to expose the financial industry's ills. It's even more fundamental than any insider can contemplate.

This guys is out of his mind, art collecting and diversity are to blame for Lehman. This is laughable.

Basic story of denial and greed... yawn. Guest seems rather "wowed" by all these players.

This is repugnant- apparently, common sense still hasn't kicked in. How can anyone justify short sales- it should be illegal. Your guest sounds very proud of his 36m "accomplishment."

This guest is very annoying. He and his other 'genius' workers were "only working to help others". They were greedy and contributed to the economic crisis. He is either clueless about his contribution to the mess or disingenuous.

Why is he running down the clock by not directly answering your questions?

This guy sounds really shifty.

he wrote the book for a 7th grader and yet he can't explain this today so people can understand. strange

Mr. McDonald isn't answering the questions and he doesn't seem to have reflected on the lives impacted by the "geniuses" on the trading floor and the general problem of massive greed that was, in part, caused by Lehman. He still seems 'wow-ed' by huge numbers. I've worked in banks and the job of a trader each day is to maximize profit. That happens when accounts go up and when they go down. It is not romantic and it IS gambling.
It is a game with other people's money. Full stop.

Please ask your guest if he thinks Hank Paulson let Lehman go under to eliminate Goldman's main competition.