The nail in the coffin was when Hank Paulson, then Treasury Secretary, allowed the firm to die. "Hammering" Hank had accomplished the job he was hired to do by Goldman Sachs, where he had served as CEO, prior to taking public office. The former linebacker was made CEO to counter the presence of Lehman CEO, Dick Fuld, a notorious bully who intimidated his staff and competitors alike. Hank's physical presence neutralised Fuld's dominance of the Wall Street banking community.
“Dick is in no condition to make any decisions,” Paulson is quoted as telling a group of bankers gathered at the New York Fed to try to arrange a private rescue of Lehman. “He is in denial,” Paulson added, calling Fuld “dysfunctional.”
One can only imagine the satisfaction for Paulson, when Fuld came begging during Lehman's dying hours.
Michael Lewis, author of Liar's Poker, has written a new book called, "The Big Short" that gives insight into the financial mess that is so deep, and has so captured the framework of checks and balances that was supposed to regulate it. Check out his interview on 60 minutes:
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An excerpt from The Big Short is included in the recent edition of Vanity Fair.