NY Times: 5 Days of Pressure, Fear and Ultimately, Failure

[marmar]

5 Days of Pressure, Fear and Ultimately, Failure

By ERIC DASH
Published: September 15, 2008


A crisis of confidence in financial markets on Wall Street culminated in a weekend of brinksmanship and failed appeals that caused the demise of some of the nation’s most storied financial institutions.

It began on Tuesday, just two days after the Bush administration took control of Fannie Mae and Freddie Mac, the mortgage finance giants. Fears began to mount in earnest on Wall Street that Lehman might founder — and that the government might not ride to the rescue this time. As stock markets around the world tumbled, Lehman’s shares were hit by waves of selling that wiped out nearly half its value.

The next day, skittish employees inside Lehman’s Times Square headquarters held their breath as Richard S. Fuld Jr., Lehman’s chief executive, held an urgent conference call with investors and analysts to announce the biggest quarterly loss in the company’s 158-year history — as well as a master plan to pull the firm back from the brink. The blueprint centered on splitting Lehman into a “good” bank and a “bad” one that would get rid of troubled mortgages and real estate. Lehman would also sell most of its investment management division and cut its dividend to shareholders.

But there was little new in Mr. Fuld’s remarks, and by the end of the day, Lehman’s share price had fallen an additional 7 percent, leaving the shares down 55 percent over three days.

Employees who had clung to the belief that Lehman would never go under started polishing resumes in earnest, taking calls from headhunters and openly passing around job offers. .....(more)

The complete piece is at: http://www.nytimes.com/2008/09/16/business/16reconstruct.html?_r=1&hp=&adxnnl=1&oref=slogin&adxnnlx=1221483740-efVkm64lBH3yibJSf8C9kw