Now we know why Lehman Brothers filed for bankruptcy. Since it did not get a taxpayer bailout like its peers, it can pay its bankers as much as it wants. I bet all those top banking executives who had to agree to no bonuses are really feeling sorry for themselves now.
How so? The Daily Beast reports -- based on three sources close the situation -- that an obscure Lehman banker, Hugh "Skip" McGee III, the former head of investment banking at Lehman Brothers, negotiated a two-year, $25-million-a-year contract to remain global head of investment banking at the British bank Barclays plc (NYSE: BCS) as part of the deal where Barclays bought Lehman Brothers' U.S. banking business out of bankruptcy. (The Daily Beast has indicated that Barclays declined to corroborate the information from the three sources).
This alleged $50-million man helped negotiate the deal in which the British bank stole -- I mean, picked up dirt cheap -- the Lehman investment banking business. U.S. Bankruptcy Court Judge James Peck approved Barclays deal to buy some Lehman assets -- including paying $1.29 billion for its headquarters and two data centers -- and assume some liabilities such as the accrued bonuses for any Lehman bankers still on the Barclays payroll at the end of 2008.
While 10,000 Lehman bankers were there when Peck approved the deal, only half of them are there now. One of those is Skip McGee, Lehman's alleged $50 million man.
Does that sound right to you?
Peter Cohan is president of Peter S. Cohan & Associates. He also teaches management at Babson College. His eighth book is You Can't Order Change: Lessons from Jim McNerney's Turnaround at Boeing. He has no financial interest in the securities mentioned.
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Reader Comments (Page 1 of 1)
1-09-2009 @ 4:51PM
ATHELSTAN said...
This is just another nail in the coffin of the financial services community and, specifically, the banking profession. Jail time may be too good for most of them.
If Bush and Paulson had seized the nation's banks and their assets at the outset, we wouldn't have an angry American people now on the verge of insurrection and revolution. Ready to hang every banker in the nation.