Heads roll after Lehman Brothers' $3bn loss

The Australian ^ | 14June 2008 | Susanne Craig

[BGHater]

Facing a credibility crisis with investors, Lehman Brothers Holdings has replaced its president and chief financial officer, showing that the bloodletting on Wall Street is far from over.

Lehman chief executive Richard Fuld, the longest-serving head of a major Wall Street firm, removed Joseph Gregory, a life-long friend, as his No2 and demoted Erin Callan, Lehman's finance chief and the highest-ranking woman on Wall Street.

Ms Callan had taken over as chief financial officer only in December and quickly assumed a high-profile role, countering Lehman's critics by going on TV and eagerly engaging questions about the firm.

But instead of mollifying short sellers -- investors betting that Lehman's stock would fall -- her responses seemed to deepen Lehman's woes. Her actions appeared to be fanning the flames by giving some on Wall Street the impression that the fight was distracting her from the challenge of helping to pull Lehman through the continuing credit crisis.

The company's surprise projection last week of a $US2.8 billion ($2.98 billion) loss in the latest quarter, and its announcement that it was forced to raise another $US6 billion in new capital, only deepened scepticism about Lehman's future.

In an emotional meeting on Wednesday afternoon this week, Mr Gregory -- who started out with Mr Fuld in the firm's powerful fixed-income department more than 30 years ago -- told his boss: "We have lost credibility, (and) Wall Street wants a head," according to a person familiar with the exchange. Mr Gregory and Ms Callan will be succeeded by long-time Lehman insiders Bart McDade, 48, and Ian Lowitt, 44.

[Red_Devil 232]

Wonder how many millions of dollars were paid to the fire-es as they were escorted out the door?

[Pearls Before Swine]

Since they were both apologizing for the results of policies (i.e., high leverage, big real estate additions during the early part of the decline) ok’d by Fuld, he might be next. Depends on the board and major shareholders.

[willgolfforfood]

Exactly. If I had a $50 million golden parachute here, I’d be begging to get fired. I’d probably be TRYING to get fired.

[IDontLikeToPayTaxes]

Wonder how many millions of dollars were paid to the fire-es as they were escorted out the door?

More like TENS of millions.

I see Carly Firiona landed well after destroying Hewlett Packard. She's on McCain's campaign committee.

[Non-Sequitur]

Wonder how many millions of dollars were paid to the fire-es as they were escorted out the door?

Oh, enough so that they don't have to worry what unemployment insurance is these days.