Lehman Managers Portrayed as Irresponsible - NYTimes.com
Even as the investment bank Lehman Brothers pleaded for a federal bailout to save it from bankruptcy protection, it approved millions of dollars in bonuses for departing executives, a Congressional committee was told Monday.Another document showed that executives were warned in a January 2008 meeting that the company was facing liquidity problems. Yet the firm moved forward with capital outlays, including $5 billion in bonuses, $4 billion in shares and $750,000 in dividend payments between 2007 and the firm’s bankruptcy filing on Sept. 15.But maybe these "smart folks" really earned their money - right? Well, for tens-of-millions in salary alone you'd hope at least the boss knew what was going on at his own company...
One Lehman document among thousands reviewed by the House committee showed that four days before the bank filed for bankruptcy protection, Lehman’s compensation committee was asked to grant $20 million in “special payments” for three executives who were leaving,
Testifying before the committee, Lehman’s chief executive, Richard S. Fuld Jr., said that he took full responsibility for the decisions he made while at the helm. But he also told lawmakers that it was unreasonable to expect that he should have seen the financial crisis coming.In other words: he's supposedly worth the incredible salary he made, but he really couldn't be expected to actually know what his company was really doing and was really worth... Can you actually believe he had the gall to make that statement?
Free-markets are great when the market is open... when people with new ideas and better ways of doing something can easily enter (and leave) the marketplace. This is why software development and web entrepreneurship is vibrant: thousands of companies and individuals enter the marketplace with new ideas -- almost every day. You can start a software company in your den-- with little more than a $600 PC and dedication and a few good ideas.
And if you fail, your out: no government bail-outs.
But ask yourself how easy it would be to create the "better investment bank" (even if you had the most innovative idea in banking to come along in the last century)... And what are the consequences if a large one fails? Apparently, we can't just let them die.
The two industries present a completely different picture. But we're told (by conservatives who can't think past the phrase "free markets are good!") that free-market capitalism always provides the best solutions...
Why do so many Americans buy into this garbage? Why - because the Republican machine has been spewing the message for the last 30 years...
The only good to come out of this mess is the hope that people may learn a lesson... that ideology and the "purity of your economic theory" doesn't solve problems -- pragmatic thinking solves problems.