Interview With Lawrence McDonald, Author Of Book On Lehman Brothers' Demise

A few weeks ago we posted up a great interview with Lawrence McDonald, the author of New York Times Bestseller book, A Colossal Failure of Common Snese: The Insider Story of the Collapse of Lehman Brothers. Our buddy Misstrade interviewed Larry regarding his background and his experience during Lehman's demise. Today we have the follow-up interview where Larry gives us insight as to how things operated at Lehman on a day to day basis with a focus on the trading floors. (You can check out the first interview here). And now embedded below is the second interview courtesy of Misstrade.

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A quote from Lawrence McDonald from the interview stuck with us. He says, "The story of Lehman Brothers comes down to this one sentence: There's 24,992 people making money and 8 guys losing it." This just goes to highlight how eight people can run amuck and go crazy with credit and ultimately lead to the demise of the firm. Lehman Brothers survived the Civil War, numerous World Wars, 9/11 and then was brought down by a combination of a poor board of directors, leverage, and a lack of risk understanding by CEO Dick Fuld, claims Larry in his book.

Very interesting stuff as we get to see how Lehman operated in its day to day operations. The shocking thing here is that at one point they had almost 40% of their net tangible assets in essentially 3 commercial real estate transactions. They had essentially become a hedge fund and private equity firm that was running 40:1 leverage at one point. For more in-depth insight, of course make sure you check out Lawrence's excellent book, A Colossal Failure of Common Sense: The Insider Story of the Collapse of Lehman Brothers. This is definitely a great inside look at what went down as Lehman went down.

Lawrence McDonald's Book on the Fall of Lehman Brothers: A Colossal Failure of Common Sense

Lawrence McDonald, a former Vice President at Lehman Brothers has written an insightful insider account of the collapse that rocked Wall Street. Quickly climbing the ranks of the NY Times Bestseller list, his book is entitled, A Colossal Failure of Common Sense: The Insider Story of the Collapse of Lehman Brothers. In the book, he gives you tons of details regarding the fall and pegs the demise on decisions from chief executive and chairman Richard (Dick) Fuld. Essentially, Lehman was a large hedge fund employing 40:1 leverage and at one point had 35% of its net tangible assets in three huge real estate ventures. Needless to say, that's a recipe for disaster. The book goes on to provide juicy details that you can really sink your teeth into and is the perfect read for those who want the true insider account so that you can feel like you were there when it all went down.

The book's premise really is self-explanatory so pick it up for all the intriguing details. To give us more color, here's an interview Lawrence McDonald (the author of the book & now a managing director at hedge fund Pangea Capital) did with our pal over on Twitter, Misstrade.

(RSS & Email readers come to the blog to view the video interview):




Interesting stuff certainly. Of course make sure you check out Lawrence's excellent book, A Colossal Failure of Common Sense: The Insider Story of the Collapse of Lehman Brothers. If you want to get behind closed doors, then this is the book for you.