The Murder of Lehman Brothers by Joseph Tibman, published by Brick Tower Press

Joseph Tibman admits that this is a nom de plume and that he is really an investment banker still hoping to resurrect his career. My advice to him after reading the book would be to maybe give up the day job because he is an excellent writer. He combines brilliantly a description of what it was like at Lehmans as they headed for meltdown with a deep and thoughtful analysis of the causes of the global financial crisis.


He quite rightly does not look for one cause or one party to blame. He traces the underlying causes back to the Clinton years when deregulation and high risk borrowing for home buyers were first encouraged. He admits however that Lehman sowed the seeds of its own downfall by overloading its Balance Sheet with too much property lending, making the fatal mistake of not seeing or spreading the risks involved. He is particularly hard on the former CEO Dick Fuld who would not listen to advice from colleagues and forced all those disagreed with him to leave.

But the author also blames himself and most others at Lehman who ‘drank their own Kool-Aid’, a curious expression which seems similar to ‘burying heads in the sand’. They heard what they wanted to hear and did not see the warning signs; they could not believe that the company that had survived 9/11 could ever be defeated by economic turbulence, or could ever be allowed to go bust.

Perhaps this was because they had seen the USA government arrange for rival Bear Sterns to be bailed out by JP Morgan and thought that this proved that no major bank could ever be allowed to collapse. And it is in this connection that the author becomes most bitter, his ire being directed towards Henry Paulson, the former Goldman Sachs investment banker who was Bush’s Treasury Secretary.

Though the author has a vested interest, you cannot help but appreciate his argument. First of all - why Lehman when Bear Sterns and later AIG were saved? Secondly, the bankruptcy of such a major financial institution was the major factor in accelerating the global depression. And, in the author’s view, it was all based on the principle of ‘moral hazard’ - that banks must believe that it is possible to fail because otherwise they will take undue risks.

The book reads like a novel, has some excellent footnote descriptions of relevant financial and banking concepts and provides a great inside story of the Lehman collapse; it is highly recommended.