This time Fuld, who's been nicknamed "Gorilla" for his management style, isn't picking up the phone and asking his staff to stop spreading rumors as he did 10 years ago, according to The New York Times. Instead he's playing, in his own phrase, "whack-a-mole" to see if other firms are still trading with Lehman, according to The Wall Street Journal. This is a very bad sign.
Now CNBC says Goldman, Sachs & Co. might want to play the role of white knight that J.P. Morgan & Chase Co. played in the Bear Stearns Cos. implosion. Yes, this is the same Goldman that was accused of shorting Bear Stearns. Why would Goldman want Lehman? It's not because, as Reuters said, "Integrating two large investment banks would be too disruptive."
We're hearing right now that Goldman doesn't have much interest in buying Lehman, especially if the Fed isn't backing. That would make sense -- particularly the Fed part. But that's just talk, and right now rumor and speculation are rife.
The real question is what would Goldman stand to gain from purchasing Lehman? J.P. Morgan got Bear Stearns, including its billion-dollar headquarters. What does Lehman have that Goldman doesn't already possess in spades, particularly with Lehman's big fixed-income business in the dumps? There's asset management, including Neuberger Berman LLC and some private equity, and a decent investment banking operation. Goldman, of course, has plenty of bankers, particularly for this market, and Neuberger is a retail money manager, not traditionally Goldman's thing. And, of course, there are those nasty mortgages.
What Goldman might get out of the deal is the good will of the Fed, which might well want a buyer to move in -- and since Goldman is just about the only U.S. firm untainted by mortgage woes, it would conceivably get the call. This scenario would be based on the not-unrealistic notion that after Bear, Fannie and Freddie, the Fed might not want to backstop a dying Lehman for long. Goldman might also feel it has to remove a festering sore from Wall Street's hide -- though that kind of altruism would come at a price. Goldman does have shareholders after all.
Now, if Goldman and no one else is interesting in buying Lehman, it is possible the Fed could just let it expire, as Drexel Burnham Lambert did in 1990. Unlike Bear Stearns, the Fed has had plenty of time to estimate Lehman's systemic impact. If it allows the firm to go down, it might well suggest just how shattered Lehman was -- and just why Goldman shied away from it. But that's just more speculation -- just what the world needs right now. - Maria Woehr
CNBC is now reporting that CEO Dick Fuld is now looking to sell off Lehman Brothers Inc.
Apparently after the stock fell on the announcement of the firm's restructuring plan Wednesday, Fuld picked up the phone and started dialing major financial institutions to see if there was interest in buying.
