Much as I find it hard to muster sympathy for thousands of overpaid investment bankers forced to walk to the unemployment office in their designer shoes, the news that Lehman Brothers Holdings Inc. (NYSE: LEMQ) won't be paying them severance made me feel a little sorry for them.According to Bloomberg News, the New York-based firm recently notified employees that they will not receive a payment on October 3 or after. The company reneged on a promise to the fired workers to pay them severance until August 2009. Workers who want the rest of their compensation will have to file a claim with the bankruptcy court. It will take years for the former employees to get paid through Chapter 11 and even then they might only get a fraction of what they are owed.
Bloomberg reports that it is not clear how many former Lehman employees have been affected. You can bet that members of Congress and the Department of Justice will be interested to know if Chief Executive Richard Fuld will receive a golden parachute once Barclay's PLC (NYSE: BCS) completes its takeover of the once-storied New York investment bank.
You can hate Wall Street all you want. You can rail against the $700 billion bailout to keep the banking system from falling to the abyss, but it's important to remember that the credit crisis has a human toll. The secretaries, security guards and back office staff who are out of work probably never heard of a mortgage-backed security until they read about it in the media. The bankers who knew about the securities face daunting odds of ever finding work on Wall Street again. Recruiters are getting flooded with resumes. Many people are growing disgusted with the financial services industry and looking for other lines of work.
One person who is not likely to suffer much is Fuld, who was the longest tenured CEO on Wall Street. His testimony before Congress yesterday won him fewer friends than the tobacco CEOs who spoke about the health effects of nicotine. Interestingly, Rep. Henry Waxman (D-CA) presided over both hearings. According to the New York Times, Fuld and other Lehman executives are facing preliminary inquiries from federal prosecutors about whether they misled investors about the state of the company's finances.
Though it remains unclear whether Fuld was guilty of anything more than incompetence and being a jerk, he certainly failed to do right by both his shareholders and employees.
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Reader Comments (Page 1 of 1)
10-07-2008 @ 1:39PM
M Morris said...
Fuld is a nutcase and practically a sociopath. Clearly he does not either understand or care about the damage he has created in the market. I really think once anyone is making that kind of silly money they lose all their grip on reality. Its like living in a palace made of gold. Its just not conducive to empathy for your fellow human beings.
10-07-2008 @ 2:23PM
Owen said...
Are you high? These people make 200 a year taking risk with other people's money. They need not get paid for a year of not working. You ought to feel bad for the single mother who works at Wal-mart. And don't tell me you get what you earn because no one deserves 9 an hour for busting ass.
10-07-2008 @ 2:34PM
phil said...
They sure care screwing thier officers I heard one of them was only getting 16 million dollars severance pay. Now just how in hell can one live on that? Hmmmm.