A Deluded Banker’s Tale of Lehman’s Last Days

Authored by Shuli Ren, first published on Bloomberg

On a Sunday night 10 years ago, I was sitting alone in my midtown Manhattan apartment on 46th Street, preparing to dial into a conference call to discuss the impending demise of my employer: Lehman Brothers Holdings Inc. 

That morning, Sept. 14, it had become widely accepted that Lehman would go into bankruptcy. Farewell and personal-contact emails started to stream in from colleagues. I wondered whether we would be able to return to work Monday. 

The call was like a tall glass of Kool-Aid. Lehman would probably find a buyer, and as part of the “good bank,” our team would be on safer ground, we were told. We could also market our group and perhaps find a new home. I drank with gusto.

I, and probably many others, thought there was no way Lehman would be liquidated, and that my quantitative equity research group would be all right.

Sure, Lehman held toxic assets. But for years, it had also housed Wall Street’s top-ranked fixed-income and equity research divisions. They must be of some value. We weren’t greedy bankers who packaged rotten meat into fancy sausages; we were the good ones, I reasoned.

For me, a senior associate, the final days of Lehman weren’t the Fall of Rome or the sinking of the Titanic. It was eerily quiet at 745 Seventh Avenue. I was running regression models and documenting my work — all the way until October — in an emptying office.

It was easy to be in denial. We had become used to walking by rows of empty desks piled with used BlackBerry mobile phones — a daily reminder that Lehman, and other firms, had already cast thousands out into a banking equivalent of “The Hunger Games.” In the 12 months through October 2008, New York City shed about 16,300 securities industry jobs.

So the best course of action was to hang on, work hard and prove our group’s worth. Once out, we could be staring at years of unemployment, fighting with multitudes for a handful of openings.

During the ensuing month, things almost started to look up. Barclays Plc bought Lehman— and us — some time. We chatted with a few hedge funds and even met with my current employer, Bloomberg LP, which was just starting to develop in-house credit research tools.

The real crash for me came on a bleak October Friday afternoon. Our managing director was fired and we all knew our Enterprise Valuation Group was done. I started sending out my resume. 

Looking back, the writing was all over the wall. Our group was overly ambitious, deploying our research for prop trading as well as trying to sell to third parties. Barclays had no appetite for this oddball hybrid; all it saw was a cost center. But having developed so much camaraderie with colleagues, we were too emotionally involved and it was hard to see clearly what was happening.

When I left Barclays in February 2009, it felt like the end of the world. Ten years on, the U.S. stock market is having a record bull run. Our group’s capital structure arbitrage model, which predicted companies most likely to reward investors with cash, would have worked beautifully in a market that has since handed out $7 trillion in dividends and buybacks. Our group was ahead of its time. 

Lehman’s bankruptcy left its mark. Afterwards, whenever my employer announced a restructuring, my first instinct was to calculate how much time I had before getting the boot. But the bankruptcy also teased me out of my comfort zone and gave me a taste for adventure. Seven years ago, I switched careers, moved continents, and now am happily writing columns about crazy rich Asians.

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