Richard Severin Fuld Jr. (born April 26, 1946) is an American banker best known as the final chairman and chief executive officer of
investment bank
Investment is the dedication of money to purchase of an asset to attain an increase in value over a period of time. Investment requires a sacrifice of some present asset, such as time, money, or effort.
In finance, the purpose of investing i ...
Lehman Brothers
Lehman Brothers Holdings Inc. ( ) was an American global financial services firm founded in 1847. Before filing for bankruptcy in 2008, Lehman was the fourth-largest investment bank in the United States (behind Goldman Sachs, Morgan Stanley, a ...
. Fuld held this position from the firm's 1994 spinoff from
American Express until 2008. Lehman Brothers filed for
bankruptcy protection
Bankruptcy is a legal process through which people or other entities who cannot repay debts to creditors may seek relief from some or all of their debts. In most jurisdictions, bankruptcy is imposed by a court order, often initiated by the debtor ...
under
Chapter 11
Chapter 11 of the United States Bankruptcy Code (Title 11 of the United States Code) permits reorganization under the bankruptcy laws of the United States. Such reorganization, known as Chapter 11 bankruptcy, is available to every business, wheth ...
on September 15, 2008, and subsequently announced the sale of major operations to parties including
Barclays Bank
Barclays () is a British multinational universal bank, headquartered in London, England. Barclays operates as two divisions, Barclays UK and Barclays International, supported by a service company, Barclays Execution Services.
Barclays traces ...
and
Nomura Securities.
Fuld was named in ''
Time
Time is the continued sequence of existence and events that occurs in an apparently irreversible succession from the past, through the present, into the future. It is a component quantity of various measurements used to sequence events, ...
''
's "25 People to Blame for the Financial Crisis" list
and in
CNN
CNN (Cable News Network) is a multinational cable news channel headquartered in Atlanta, Georgia, U.S. Founded in 1980 by American media proprietor Ted Turner and Reese Schonfeld as a 24-hour cable news channel, and presently owned by ...
's "Ten Most Wanted: Culprits of the
Collapse
Collapse or its variants may refer to:
Concepts
* Collapse (structural)
* Collapse (topology), a mathematical concept
* Collapsing manifold
* Collapse, the action of collapsing or telescoping objects
* Collapsing user interface elements
** ...
". Fuld was nicknamed "the gorilla" for his intimidating presence.
Early life
Fuld was born to
Jewish
Jews ( he, יְהוּדִים, , ) or Jewish people are an ethnoreligious group and nation originating from the Israelites Israelite origins and kingdom: "The first act in the long drama of Jewish history is the age of the Israelites""The ...
parents, the son of Richard Severin Fuld Sr. He is a
second cousin
Most generally, in the lineal kinship system used in the English-speaking world, a cousin is a type of familial relationship in which two relatives are two or more familial generations away from their most recent common ancestor. Commonly, ...
of professional baseball player and executive
Sam Fuld
Samuel Babson Fuld (born November 20, 1981) is an American former professional baseball outfielder and the current general manager of the Philadelphia Phillies. He played eight seasons in Major League Baseball (MLB) for the Chicago Cubs, Tampa B ...
.
He attended
Wilbraham & Monson Academy
Wilbraham & Monson Academy (WMA) is a college-preparatory school located in Wilbraham, Massachusetts. Founded in 1804, it is a four-year boarding and day high school for students in Grades 9-12 and postgraduate. A middle school, with Grades 6–8 ...
, where he gained his high school diploma.
He received both a B.A. and B.S. in 1969 from the
University of Colorado Boulder
The University of Colorado Boulder (CU Boulder, CU, or Colorado) is a public research university in Boulder, Colorado. Founded in 1876, five months before Colorado became a state, it is the flagship university of the University of Colorado sy ...
, where he participated in the
Naval Reserve Officer Training Corps
The Naval Reserve Officers Training Corps (NROTC) program is a college-based, commissioned officer training program of the United States Navy and the United States Marine Corps.
Origins
A pilot Naval Reserve unit was established in September 1 ...
program and was president of the school's chapter of the
Alpha Tau Omega fraternity. Fuld completed his
M.B.A.
A Master of Business Administration (MBA; also Master's in Business Administration) is a postgraduate degree focused on business administration. The core courses in an MBA program cover various areas of business administration such as account ...
at
New York University
New York University (NYU) is a private research university in New York City. Chartered in 1831 by the New York State Legislature, NYU was founded by a group of New Yorkers led by then- Secretary of the Treasury Albert Gallatin.
In 1832, th ...
's
Stern School of Business in 1973.
Fuld is a member of
Kappa Beta Phi
Kappa Beta Phi () is a secret society, best known for its surviving Wall Street chapter that is made up of high-ranking financial executives.
The purpose of the organization today is largely social and honorific. The current honor society meets o ...
.
Career
Fuld's first career as an
Air Force
An air force – in the broadest sense – is the national military branch that primarily conducts aerial warfare. More specifically, it is the branch of a nation's armed services that is responsible for aerial warfare as distinct from an ...
pilot came to an end when he got into a fistfight with a commanding officer. He said he had been defending a young cadet who was being taunted by the senior officer. Fuld then began his career with Lehman Brothers in 1969, the year the firm's senior partner
Robert Lehman
Robert Owen Lehman, Sr. (September 29, 1891 – August 9, 1969) was an American banker, longtime head of the Lehman Brothers investment bank, and a racehorse owner, art collector, and philanthropist.
Life and career
Lehman was born to a Jewish ...
died. Fuld started trading
commercial paper
Commercial paper, in the global financial market, is an unsecured promissory note with a fixed maturity of rarely more than 270 days. In layperson terms, it is like an " IOU" but can be bought and sold because its buyers and sellers have some ...
and developed a reputation as an accomplished fixed income trader.
Lehman Brothers
Fuld worked for Lehman for nearly 40 years. During this time, Fuld witnessed and participated in numerous evolutions within the organization, including its merger with
Kuhn, Loeb & Co, its acquisition by
American Express, its merger with
E.F. Hutton
EF Hutton was an American brokerage firm, stock brokerage firm founded in 1904 by Edward Francis Hutton and his brother, Franklyn Laws Hutton. Later, it was led by well known Wall Street trader Gerald M. Loeb. Under their leadership, EF Hutton b ...
and its ultimate spin-off from American Express in 1994, once again as Lehman Brothers. Once public, the new company traded under the stock ticker LEH.
Fuld was the longest-tenured CEO on Wall Street at the time of the
financial crisis of 2007–2008
Finance is the study and discipline of money, currency and capital assets. It is related to, but not synonymous with economics, the study of production, distribution, and consumption of money, assets, goods and services (the discipline of fi ...
.
Fuld had steered Lehman through the
1997 Asian Financial Crisis, a period where the firm's share price dropped to $12 in 1998. Lehman had a yearly loss of $102 million in 1993, but after Fuld became CEO the firm had fourteen straight years of profits, including one of $4.2 billion in 2007, although in 2008 it reported a Q2 loss of $2.8 billion and filed for bankruptcy later that year.
[Fishman, Steve (November 30, 2008)]
"Burning Down His House"
''New York''. Similar to the fall of
Barings Bank
Barings Bank was a British merchant bank based in London, and one of England's oldest merchant banks after Berenberg Bank, Barings' close collaborator and German representative. It was founded in 1762 by Francis Baring, a British-born member ...
, this was accomplished by driving up company earnings through excessive
leverage
Leverage or leveraged may refer to:
*Leverage (mechanics), mechanical advantage achieved by using a lever
* ''Leverage'' (album), a 2012 album by Lyriel
*Leverage (dance), a type of dance connection
*Leverage (finance), using given resources to ...
and risk.
Fuld had a succession of "number twos" under him, usually titled as president and chief operating officer. T. Christopher Pettit served until November 26, 1996, when he lost a power struggle with his deputies, likely brought about after Pettit had a mistress, which violated Fuld's unwritten rules on marriage and social etiquette.
This president and COO position would remain vacant until
Joseph M. Gregory
Joseph M. Gregory (born 29 February 1952) is a US banker and held the last President/COO position of investment bank Lehman Brothers Holdings Inc
Lehman Brothers Holdings Inc. ( ) was an American global financial services firm founded in 1847. ...
was appointed president and COO in 2002. Bradley Jack and Gregory were appointed co-COOs in 2002, however Jack was demoted to the Office of the chairman in May 2004 and departed in June 2005 with a severance package of $80 million, making Gregory the sole COO and president. Along with CFO Erin Callan, Gregory was demoted on June 12, 2008 and replaced by
Bart McDade, who would see Lehman through bankruptcy.
In 2006, ''
Institutional Investor'' magazine named Fuld America's top chief executive in the private sector. That same year in December, Fuld told ''
The Wall Street Journal
''The Wall Street Journal'' is an American business-focused, international daily newspaper based in New York City, with international editions also available in Chinese and Japanese. The ''Journal'', along with its Asian editions, is published ...
'', "as long as I am alive this firm will never be sold."
In March 2008, Fuld appeared in ''
Barron's Barron's or Barrons may refer to:
*Barron's Educational Series, a publisher of books, as well as college entrance exam preparation classes and materials, now an imprint of Kaplan Test Prep
** B.E.S. Publishing, the former owner of Barron's
* ''Barr ...
'' list of the 30 best CEOs and was dubbed "Mr. Wall Street".
Overall, Fuld received nearly half a billion dollars in total compensation from 1993 to 2007. In 2007, he was paid a total of $22,030,534, which included a base salary of $750,000, a cash bonus of $4,250,000 and stock grants of $16,877,365. According to ''
Bloomberg Businessweek
''Bloomberg Businessweek'', previously known as ''BusinessWeek'', is an American weekly business magazine published fifty times a year. Since 2009, the magazine is owned by New York City-based Bloomberg L.P. The magazine debuted in New York City ...
'', Fuld "famously demanded loyalty of everyone around him and demonstrated his own by keeping much of his wealth tied up in the firm", even buying Lehman shares on margin, according to a friend.
Lehman Brothers bankruptcy and aftermath
Fuld was initially praised for handling the initial
subprime mortgage crisis well, better than any of the other
bulge bracket firms, behind
Goldman Sachs.
Fuld was said to have underestimated the downturn in the US housing market and its effect on Lehman's mortgage bond underwriting business.
Fuld was already the longest-tenured CEO on Wall Street and kept his job as the subprime mortgage crisis took hold, while CEOs of rivals like
Bear Stearns
The Bear Stearns Companies, Inc. was a New York-based global investment bank, securities trading and brokerage firm that failed in 2008 as part of the global financial crisis and recession, and was subsequently sold to JPMorgan Chase. The comp ...
,
Merrill Lynch and
Citigroup were forced to resign.
In addition, Lehman's board of directors, which includes retired CEOs like
Vodafone
Vodafone Group plc () is a British multinational telecommunications company. Its registered office and global headquarters are in Newbury, Berkshire, England. It predominantly operates services in Asia, Africa, Europe, and Oceania.
, Vod ...
's Christopher Gent and
IBM's
John Akers
John Fellows Akers (December 28, 1934 – August 22, 2014) was an American businessman. He was president (1983-1989), chief executive officer (1985-1993) and chairman (1986-1993) of IBM.
Education
Akers attended Yale, and while there became a bro ...
, were reluctant to challenge Fuld as the firm's share price spiraled lower.
Fuld was criticized for not completing several proposed deals, either a capital injection or a merger, that would have saved Lehman Brothers from bankruptcy. Interested parties had included
Warren Buffett
Warren Edward Buffett ( ; born August 30, 1930) is an American business magnate, investor, and philanthropist. He is currently the chairman and CEO of Berkshire Hathaway. He is one of the most successful investors in the world and has a net ...
and the
Korea Development Bank
Korea Development Bank (KDB Bank, SWIFT: KODBKRSE) is a wholly state-owned policy development bank in South Korea. It was founded in 1954 in accordance with The Korea Development Bank Act to finance and manage major industrial projects to expedit ...
. Fuld was said to have played a game of
brinkmanship
Brinkmanship (or brinksmanship) is the practice of trying to achieve an advantageous outcome by pushing dangerous events to the brink of active conflict. The maneuver of pushing a situation with the opponent to the brink succeeds by forcing the op ...
, refusing to accept offers that could have rescued the firm because they didn't reflect the value he saw in the bank.
However, ''
New York'' magazine had a different view on Fuld's last three months as CEO before the firm's bankruptcy.
Hugh "Skip" McGee III, then-head of the Investment Banking Division, had earlier disagreed with COO Joseph M. Gregory's appointment of one of his subordinates, Erin Callan, as CFO. On June 11, 2008, McGee organized a meeting of the firm's senior bankers, who forced Fuld to demote Callan and Gregory. Gregory's replacement as president and COO was
Bart McDade. While Fuld remained CEO in title, it has been said that a management coup had taken place and that the one person in charge then was McDade. ''New York'' magazine's account also stated that Fuld was desperately searching for a buyer during the summer and even offering to step aside as CEO to facilitate the sale of the firm, being quoted as saying "We have two priorities, that the Lehman name and brand survive and that as many employees as possible be saved and you'll notice our priority isn't price".
In his 2009 book ''A Colossal Failure Of Common Sense'', Larry McDonald—a senior Lehman Brothers trader in the years leading up to the crash—wrote that Fuld's "smoldering envy" of Goldman Sachs and other Wall Street rivals led him to ignore warnings from Lehman executives about the impending crash and that Fuld insisted the firm's chief risk officer leave the boardroom during key discussions.
In October 2008, Fuld was among twelve Lehman Brothers executives who received
grand jury subpoenas
A subpoena (; also subpœna, supenna or subpena) or witness summons is a writ issued by a government agency, most often a court, to compel testimony by a witness or production of evidence under a penalty for failure. There are two common types of ...
in connection to three criminal investigations led by the
United States Attorney
United States attorneys are officials of the U.S. Department of Justice who serve as the chief federal law enforcement officers in each of the 94 U.S. federal judicial districts. Each U.S. attorney serves as the United States' chief federal ...
's offices in the Eastern and Southern
Districts of New York as well as the District of New Jersey, related to the alleged securities fraud associated with the collapse of the firm.
On October 6, 2008, Fuld testified before the
United States House Committee on Oversight and Government Reform regarding the causes and effects of the bankruptcy of Lehman Brothers. During the testimony, Fuld was asked if he wondered why Lehman Brothers was the only firm that was allowed to fail, to which he responded: "Until the day they put me in the ground, I will wonder."
The
Report of Anton R. Valukas, the official court-mandated investigation into the Lehman bankruptcy, concluded that "While the business decisions that brought about the crisis were largely within the realm of acceptable business judgement, the actions to manipulate financial statements do give rise to "colorable claims", especially against the CEO and CFOs but also against the auditors.
In the opinion of the Examiner, "colorable" is generally meant to mean that sufficient evidence exists to support legal action and possible recovery of losses." "Regarding liquidity, throughout 2008 Lehman made false claims of having billions of dollars in available cash to repay counterparties when in reality, significant portions of the reported amounts were in fact encumbered or otherwise unavailable for use. On September 12, 2008, two days after reporting $41 billion in liquidity, true available funds totaled only $2 billion." Lehman filed for bankruptcy on September 15.
After Lehman Brothers
On November 10, 2008, Fuld transferred his Florida mansion to his wife Kathleen for $100. They had bought it four years earlier for $13.75 million.
In March 2009, Fuld sent out an email stating that he had joined Matrix Advisors in New York City.
In May 2010, Fuld was registered by the
Financial Industry Regulatory Authority
The Financial Industry Regulatory Authority (FINRA) is a private American corporation that acts as a self-regulatory organization (SRO) that regulates member brokerage firms and exchange markets. FINRA is the successor to the National Associat ...
(FINRA) as employed by Legend Securities, a securities brokerage and investment banking firm in New York. Fuld left the firm in early 2012.
By July 2015, Matrix Advisors, led by Fuld, had grown to about two dozen employees. The firm focuses on small and medium-sized enterprises, advising clients on a range of matters, from opening product distribution channels to completing mergers and acquisitions, and sourcing private equity and venture capital funding. By 2016, Matrix Private Capital LLC had $100 million in assets under management from 18 families. By November 2017, the company had expanded by opening offices in
Los Angeles
Los Angeles ( ; es, Los Ángeles, link=no , ), often referred to by its initials L.A., is the List of municipalities in California, largest city in the U.S. state, state of California and the List of United States cities by population, sec ...
and
Palm Beach.
Also in mid-2015, Fuld put up for auction his 71-acre estate in
Sun Valley, Idaho. The property was estimated to sell for $30 to $50 million in August 2015, but sold at an auction in September for just over $20 million.
As of 2018, Fuld remained critical of the government's decision not to bail out Lehman despite bailing out other financial firms in distress. Fuld reserves his most pointed criticisms for his longtime rival,
Henry Paulson, who ran Goldman Sachs Group Inc. before heading the U.S. Treasury during the
financial crisis of 2007–2008
Finance is the study and discipline of money, currency and capital assets. It is related to, but not synonymous with economics, the study of production, distribution, and consumption of money, assets, goods and services (the discipline of fi ...
. By 2018, almost all claims brought against Lehman since the bankruptcy had been resolved (with $4.1 billion remaining from $1.2 trillion).
In a 2018 book on the subject, ''The Fed and Lehman Brothers: Setting the Record Straight on a Financial Disaster'', economist
Laurence M. Ball argues that Lehman had ample collateral to justify a U.S. government loan that would have staved off bankruptcy, rejecting statements from former officials that such a bailout would have been illegal. The
Report of Anton R. Valukas, however, established that Lehman's assets were shrouded in uncertainty around the time of the bankruptcy, due to extensive balance sheet manipulation and accounting fraud.
Accolades and directorships
In 2006, Fuld was named No. 1 CEO in the Brokers & Asset Managers category, by ''
Institutional Investor'' magazine. In 2007 he received a $22 million bonus.
In October 2008,
CNN
CNN (Cable News Network) is a multinational cable news channel headquartered in Atlanta, Georgia, U.S. Founded in 1980 by American media proprietor Ted Turner and Reese Schonfeld as a 24-hour cable news channel, and presently owned by ...
named Fuld as one of the "Ten Most Wanted: Culprits of the Collapse" regarding the
financial crisis of 2007–2008
Finance is the study and discipline of money, currency and capital assets. It is related to, but not synonymous with economics, the study of production, distribution, and consumption of money, assets, goods and services (the discipline of fi ...
; he was placed 9th on the list.
In December 2008, Fuld was given the "Lex Overpaid CEO" award of the ''
Financial Times
The ''Financial Times'' (''FT'') is a British daily newspaper printed in broadsheet and published digitally that focuses on business and economic current affairs. Based in London, England, the paper is owned by a Japanese holding company, Ni ...
'' for having received $34 million in 2007 and $40.5 million in 2006, the last two years before his bank's failure. The total compensation he received from 2000 until the bankruptcy was $484 million
Fuld was named in ''
Time
Time is the continued sequence of existence and events that occurs in an apparently irreversible succession from the past, through the present, into the future. It is a component quantity of various measurements used to sequence events, ...
''
's "25 People to Blame for the Financial Crisis" list.
Fuld at one time served on the board of directors of the
Federal Reserve Bank of New York, a position he ceased holding shortly before the bankruptcy of Lehman Brothers. He is a member of the International Business Council of the
World Economic Forum
The World Economic Forum (WEF) is an international non-governmental and lobbying organisation based in Cologny, canton of Geneva, Switzerland. It was founded on 24 January 1971 by German engineer and economist Klaus Schwab. The foundation, ...
and the Business Council. He also serves on the Board of Trustees of
New York-Presbyterian Hospital The NewYork-Presbyterian Hospital is a nonprofit academic medical center in New York City affiliated with two Ivy League medical schools, Cornell University and Columbia University. The hospital comprises seven distinct campuses located in the New ...
. He was also on the board of directors of the
Robin Hood Foundation
The Robin Hood Foundation is a charitable organization which attempts to alleviate problems caused by poverty in New York City. The organization also administers a relief fund for disasters in the New York City area. In 2010, a key supporter gave ...
but was removed from the Board following the Lehman Brothers bankruptcy.
In popular culture
*Richard Fuld was portrayed by
Corey Johnson in the 2009
BBC #REDIRECT BBC #REDIRECT BBC
Here i going to introduce about the best teacher of my life b BALAJI sir. He is the precious gift that I got befor 2yrs . How has helped and thought all the concept and made my success in the 10th board exam. ...
...
''.
'' was released, depicting a bank loosely based on Lehman Brothers.
portrayed "John Tuld", a character inspired, in part, by Fuld.
{{DEFAULTSORT:Fuld, Richard S. Jr.