Sunday, May 31, 2015
Dick Fuld, the former head of Lehman Brothers, was in the news a couple days ago for having given a speech in New York City, his first public appearance in six years. Ever since 2008, Fuld has been regarded as one of the bad actors of the financial crisis.
He insists to this day that the Fed and the Treasury Department allowed Lehman Brothers to collapse for doing what everyone else was doing, and that they could have saved Lehman the same way they saved Bear Stearns and Merrill Lynch.
I suspect Fuld is right about this, though I'm not sure Lehman deserved to be saved -- any more than Bear Stearns or Merrill Lynch did. All of these firms allowed themselves to get way too leveraged in the midst of an overheated housing market, ignoring fiscal prudence in an attempt to maximize short term profits.
In any case, Fuld was widely reviled after the Lehman bankruptcy, not only by the public but also by many of his former employees at Lehman.
I met Fuld once, in 1984, when he interviewed me for a job at Lehman. It was the most memorable interview I ever had. He was already widely known on Wall Street (at that point he was head of fixed income at Lehman), and had a somewhat scary reputation, which his intense manner gave credence to.
Fuld asked me three questions at the beginning of the interview. The first was, "What's one point on a million?" I wasn't sure what he meant, and asked, "Point?"
"A percent, one percent," he replied impatiently.
"Ten thousand," I replied.
He then asked me another mathematical question, which I answered correctly.
Then he asked, in a somewhat pretentious tone, "What is the relationship between math and music?"
This question completely befuddled me. I stumbled, "Math and music? Uh, let me see….um, is it that the timing between the beats in music can be measured mathematically?"
I looked at him for some sort of response, but he remained stone-faced. I shrugged and said, "Honestly, I don't know, I'm just guessing." I then furrowed my brow and asked, "What is the relationship?"
He ignored my question, and the interview proceeded. At the end, he asked me, "What were the three questions I asked you at the beginning?"
I was able to repeat them back to him.
I left the interview feeling unsure about how I'd done, especially given the way I'd stumbled over that third question. It wasn't until the next day that it hit me why he had asked that: he wanted to know if I was a bullshitter. There is no relationship between math and music, so any sort of glib response would have been a wrong answer.
(Wall Street bond departments don't want someone who pretends to know more than he does; people like that can cause a lot of damage.)
I later got a message from Fuld through an intermediary: "Tell him to give me a call if he wants to come work for me." The intermediary explained that that was Fuld's way of offering a job.
I didn't take the job, and went to Goldman instead, though, given my mediocre career there, that was probably the wrong decision. Then again, who knows how a career at Lehman would have turned out.
Anyway, as a result, I've always had a soft spot for Dick Fuld. (If Ted Bundy had offered me a job, I'd probably stick up for him, too.) I was grateful for the offer, but mostly I was impressed by how clever his interviewing technique was.
Fuld was testing me, in a way I didn't even realize I was being tested. He was a smart guy, with good insight into human nature. In the end, he may not have had enough insight into his own nature, and that was his -- and his firm's -- downfall. But the little snapshot I got of him was very impressive.