The memories and the macabre anniversary of Lehman Brothers' collapse are slipping away, but it's worth noting a final (for now) entry in the discussion: Joseph Tibman's just released "The Murder of Lehman Brothers: An Insider's Look at the Global Meltdown." This book has had some formidable hurdles to surmount. It's from a second-tier publisher, Brick Tower Books, which also published the earlier "Bear Trap" about the fall of Bear Stearns Cos., and it arrives just a whisker late for the Lehman remembrance show. More importantly, it was preceded by Lawrence McDonald's "A Colossal Failure of Common Sense: The Inside Story of the Collapse of Lehman Brothers," published by Crown Business and the recipient of a ton of coverage. (In the book business it's probably better to be early than late.) "The Murder of Lehman Brothers" was written by a investment banking veteran at the firm under the pseudonym of "Joseph Tibman."
"The Murder of Lehman Brothers" is a better book, in part because Tibman had a longer tenure at the firm than McDonald, a trader who worked there for four years or so. McDonald's book is as much a picaresque memoir of his own career in finance as it is a trading-floor take on the firm's decline and fall. Tibman's narrative is more straightforward and focused on Lehman itself. He presents a more nuanced portrait of the firm, its leadership, particularly CEO Richard Fuld, and the rank and file. McDonald blames Fuld for everything. Tibman acknowledges the power and respect Fuld once commanded at the firm, not only for extracting it from the deadening clutches of American Express, but for guiding it through Sept. 11 (Lehman had been in the World Financial Center before Sept. 11 and was forced to move uptown to 745 Seventh Ave.). Tibman views Sept. 11 and its aftermath as a powerful experience that forged a kind of never-say-die culture and, in hindsight, proved to be Fuld's finest moment. Tibman goes so far as to argue that real Lehmanites, the true carriers of the culture, had to have worked at the firm from that period.
Tibman, however, leaves ambivalent his own feelings about the connection between that powerful, even seductive, culture, which convinced many that the firm would survive anything, and the mortgage problems that finally engulfed it.
Tibman's reference to "the murder" of the firm suggests something more than an act of nature. So who (or what) killed Lehman? McDonald is quite clear: He unrelentingly blames Fuld and his senior team. Tibman presents a more complex and shifting judgment, which is one of the strengths of the book. He argues with himself, passing through fear, anger, resignation, self-recrimination, annoyance at the stereotypes rained down upon Wall Streeters, even bitterness; then he'll suddenly recall a younger Fuld and why he loved the deal business and working at Lehman. Fuld keeps recurring. He's the god of the 31st floor who crashes to earth. He's the powerful, explosive figure who not only presided over the buildup of the mortgage business, but then, seeming to reject the reality in front of him, failed to effectively hedge its exposure; instead Fuld doubled up, buying back shares and ramping up commercial real estate. Tibman and his colleagues chose to believe Fuld, his longtime lieutenant Joseph Gregory (who both authors depict spending much of his time encouraging diversity) and their various mouthpieces, until the end. Fuld, after all, had connections. Lehman had weathered many storms. Lehman was too important to fail. Only at the end of the book does Tibman acknowledge that the shorts were probably right and that Fuld was wrong, or worse. But that process of moving from belief to skepticism is very difficult, even, perhaps especially, for veterans of Wall Street who want to believe.
Then there's Treasury Secretary Henry Paulson. Both books tap Paulson as the key man who made the decision to let Lehman go. McDonald argues that Paulson turned on Fuld after a spat over dinner. This is comically simplistic, though McDonald loathes Fuld so much that he can't really criticize the Treasury secretary. Tibman believes Paulson never cared for the often-disagreeable Fuld, particularly after begging him to find a buyer for the firm in the summer of 2008. Both portray Paulson as a man still in thrall to Goldman, Sachs & Co., which in both books looms as the obsessional standard by which investment banks are judged. Tibman is far more critical of Paulson, arguing that the later rationale from Paulson, Ben Bernanke and Tim Geithner that the government lacked the powers to "save" Lehman was a retrospective crock (look at AIG, he says) and that the Treasury secretary was encased in ideological blinders, as evidenced by his sudden lurch toward moral hazard, which fell away only after he realized the damage Lehman's failure had wreaked.
These are difficult historical questions involving much more than just Lehman. Paulson did take credit for the decision on Lehman, but I suspect in time we will realize that more complex forces conspired to determine the firm's fate. Paulson's own defense will be out in a few months, though it remains an open question why regulators, particularly at the Federal Reserve, so underestimated Lehman's systemic effect and why they were not better prepared for the consequences. Again, Tibman, like McDonald, was not in the room where decisions were made (or not made); like the rest of us, though with a wearying obsessiveness that Tibman describes quite well, much of what the rank and file knew about the unfolding situation came from the media, from hallway scuttlebutt and feverish attempts to connect elusive dots. Tibman's book is best on the final days, capturing the waiting, the uncertainty, the gossip, the endless news shows, the ringing of phones and the omnipresent BlackBerry -- he has as many ways of describing the buzzing of a BlackBerry as an Eskimo has for snow. And then it's over: bankruptcy, then the sale to Barclays Capital, and life staggers on.
"The Murder of Lehman Brothers" is not a perfect book, though it moves quickly and inexorably. It's a memoir, with all the subjective judgments and limitations that implies. What it does better than anything else is humanize a firm and its employees in a way that's been rare of late. It rarely condemns fellow Lehmanites, even those that created the mess. But that's a testimony not only to a loyalty that's part of that remembered, intoxicating culture, but also to a firm that was by any measure very large and complex and, in the best of times, difficult to manage. It might have been a "one-firm firm," in Fuld's expression, which he seems to have lifted from Morgan Stanley's John Mack, but investment banking, trading and, say, commercial real estate and mortgage-backed securities were worlds apart. All of this complexity made accountability difficult, in real life and in these books, and places a greater burden on senior management, which of course failed utterly. At the end of the day, the lesson from Tibman's memoir of Lehman is the profound ambiguity of a seductive culture and an all-powerful, if Wizard of Oz-like leader.
Maybe that very strength is what finally killed Lehman.
Robert Teitelman is editor in chief of The Deal.