Who is to blame for Lehman Brothers Holdings Inc. debacle? Chairman and chief executive Dick Fuld will probably get the lion’s share of the blame. But its board governance — in particular the failure to control its overpowerful boss — will also be in the spotlight.
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Fuld has seemingly ruled Lehman with an iron fist. In the good times, this delivered fantastic results. But, as the ancient Greeks used to say, those inflicted by hubris are visited by goddess Nemesis. Fuld may have been able to lord it over his colleagues. But did his board act as a counterweight? Why didn’t they force him to sell the firm or assets sooner?
Well, part of the answer appears to be that some on the board had been pushing for a sale. And, Fuld himself has been scurrying around looking for solutions.
Did a deal fail to materialize because Fuld had excessively high price expectations? Certainly, from the outside, it looks like Lehman was always behind the curve of what rescuers were prepared to pay.
If so, one wonders whether the non-executive directors were informed enough to second-guess the boss. At the very least, this sorry episode rams home why Wall Street banks shouldn’t combine the roles of chairman and chief executive in one person. With a strong, independent chairman, a deal might have been done while there was much more to save.