Lehman Brothers chief executive Richard Fuld on Monday took the blame for the company's staggering second-quarter loss, and said the investment bank was too slow in reacting to the credit crisis.
“This is my responsibility,” Fuld declared in his first comments since the bank forecast last week it lost nearly US$3 billion from bad bets in mortgage-backed securities and other risky investments.
As the longest serving CEO left on Wall Street, his mission now is clearly to restore confidence to the firm’s tarnished image.
“We made active decisions to deploy our capital, some of which in hindsight were poor choices because we really didn’t act quickly enough to the eroding environment,” Fuld, sounding agitated on a conference call with analysts.
He pointed out that the investment house has acted quickly since recording its first loss since going public in 1994. Lehman last week raised US$6 billion of fresh capital and demoted its chief financial officer and chief operating officer.
Lehman also reduced the size of its balance sheet by US$147 billion, more than Fuld had targeted for the quarter. Meanwhile, it slashed mortgage holdings by 20 percent — higher than the original forecast of 15 percent.
Many of the reductions came from unstable mortgage-backed securities and leveraged loans that caused financial companies globally to write down nearly US$300 billion since last year.
The crisis has caused the ouster of Fuld’s peers from Merrill Lynch Co and Citigroup Inc, and nearly caused the collapse of Bear Stearns before it was sold to JPMorgan Chase & Co Wall Street was awaiting second-quarter results from Goldman Sachs Group Inc yesterday and Morgan Stanley today.
Fuld, while not able to rule out the possibility of further problems, said he’s “gotten the message” and is comfortable with the investment bank’s current positions.
The company reported a loss of US$2.87 billion, or US$5.14 per share, compared with a profit of US$1.26 billion, or US$2.21 per share, a year earlier.
Markdowns on risky assets caused revenue to hit negative US$668 million from last year’s US$5.51 billion.
The losses caused the ouster of chief financial officer Erin Callan and chief operating officer Joseph Gregory. Callan, who took the job in December, was one of the highest ranking women on Wall Street. Gregory had been with Lehman for three decades, and considered to be a close confidant to Fuld.
Ian Lewitt, Lehman’s newly installed chief financial officer, said he realizes that management has a tough job ahead of them.
“What do you do to rebuild confidence? You provide information. You’re transparent, and you clearly answer the questions asked. And most importantly, you show through your performance,” he said in an interview.
DISCONTENT: The CCP finds positive content about the lives of the Chinese living in Taiwan threatening, as such video could upset people in China, an expert said Chinese spouses of Taiwanese who make videos about their lives in Taiwan have been facing online threats from people in China, a source said yesterday. Some young Chinese spouses of Taiwanese make videos about their lives in Taiwan, often speaking favorably about their living conditions in the nation compared with those in China, the source said. However, the videos have caught the attention of Chinese officials, causing the spouses to come under attack by Beijing’s cyberarmy, they said. “People have been messing with the YouTube channels of these Chinese spouses and have been harassing their family members back in China,”
The Central Weather Administration (CWA) yesterday said there are four weather systems in the western Pacific, with one likely to strengthen into a tropical storm and pose a threat to Taiwan. The nascent tropical storm would be named Usagi and would be the fourth storm in the western Pacific at the moment, along with Typhoon Yinxing and tropical storms Toraji and Manyi, the CWA said. It would be the first time that four tropical cyclones exist simultaneously in November, it added. Records from the meteorology agency showed that three tropical cyclones existed concurrently in January in 1968, 1991 and 1992.
GEOPOLITICAL CONCERNS: Foreign companies such as Nissan, Volkswagen and Konica Minolta have pulled back their operations in China this year Foreign companies pulled more money from China last quarter, a sign that some investors are still pessimistic even as Beijing rolls out stimulus measures aimed at stabilizing growth. China’s direct investment liabilities in its balance of payments dropped US$8.1 billion in the third quarter, data released by the Chinese State Administration of Foreign Exchange showed on Friday. The gauge, which measures foreign direct investment (FDI) in China, was down almost US$13 billion for the first nine months of the year. Foreign investment into China has slumped in the past three years after hitting a record in 2021, a casualty of geopolitical tensions,
‘SOMETHING SPECIAL’: Donald Trump vowed to reward his supporters, while President William Lai said he was confident the Taiwan-US partnership would continue Donald Trump was elected the 47th president of the US early yesterday morning, an extraordinary comeback for a former president who was convicted of felony charges and survived two assassination attempts. With a win in Wisconsin, Trump cleared the 270 electoral votes needed to clinch the presidency. As of press time last night, The Associated Press had Trump on 277 electoral college votes to 224 for US Vice President Kamala Harris, the Democratic Party’s nominee, with Alaska, Arizona, Maine, Michigan and Nevada yet to finalize results. He had 71,289,216 votes nationwide, or 51 percent, while Harris had 66,360,324 (47.5 percent). “We’ve been through so
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