In the early days pre-meltdown, there were a handful of skeptics pointing to problems at firms like AIG, Fannie Mae, Bear Stearns and most especially Lehman Brothers.
It was not the media or the analyst community that identified the frauds, but the short sellers. In this sad tale of criminality and corruption, the shorts were the heroes. They employed an army of traders, forensic accountants, and non-cheer-leading analysts to kick the tires of the major firms where something smelled funny.
When it came to Lehman Brothers, foremost in the crowd of shorts was David Einhorn. There were many others (me included), but it was Einhorn who most completely critiqued Lehmans balance sheet, and most vocally called out the shenanigans there. he is the hero in this tale.
At the time, the media gave LEH the benefit of the doubt. And for his troubles, Einhorn was often criticized — even trashed — by various people. The most vocal criticism came from usually astute Charlie Gasparino (then at CNBC, now at Fox Business).
But when it came to Fuld, Gasparino was off his usual sharp game. Whether he was too close to Fuld personally, or it was simply another case of access journalism is unknown. As I warned, and Charlie acknowledged on the air, Fuld was using him. (He disagreed).
But the bottom line is Charlie blew this one big time. And as the video (after the jump) makes clear, he did so in way that made the character of the parties’ to the Lehman debate an issue.
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“But you put up Dick Fuld versus Mr. Einhorn? Put up Dick Fuld versus Barry Ritholtz . . . ?
Its impossible to determine who is right and wrong . . . this is so muddy. But at some point, it comes down to the people: Dick Fuld, Einhorn, Dick Fuld, Barry Ritholtz.
Who do you believe?”
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Well, it turns out that we now know who was right and who was wrong. Thanks to the yeoman’s job done by Anton Valukas, the bankruptcy examiner in the Lehman Estate, we know Lehman management was a fraud, they hid losses and leverage and played their balance sheet like a fiddle.
Not only do we know who was right and wrong, we also know that relying on the sturdy character of Investment Bank CEOs — especially this one — was not the smartest way to make a bet.
And for that, you owe David Einhorn, myself and others an apology . . .
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You are being too kind . . .
He shit the bed -
“usually astute Charlie Gasparino”
You meant: “usually insane”
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BR: Back in the Blood on the Street days, he was terrific.
Its all been down hill from there . . .
Dont forget Dennis Kneale — he is quite the tool here also
Charlie Gas-bag-arino did you favor . . .
I Believe In Dave And Barry
Come on, it’d make a funny t-shirt!
You are tenacious pit bull, Mr Ritholtz. And if ever we needed one to repeatedly dig up all these bones and gnaw on them again and again, it would be now.
More power to you.
I would not hold my breath waiting for an apology from the gas bag.
Charlie Gasparino: Latest example of “failing upwards”?
The Gas Bag couldn’t fix the tampon in his a**hole, so don’t hold your breath.
Barry says “we also know that relying on the sturdy character of Investment Bank CEOs "” especially this one "” was not the smartest way to make a bet.”
Just talking with my partner today. The guys running the big banks and investment banks are a bunch of goniffs. The Lehman report says they were adding leverage to the books in 2008. Maybe the system too oftten reinforced the profitability of taking big risks, or maybe Fuld is a very sick man who suffers from MANIA
Of course this does not apply to Blankfein who we all know is “doing God’s work” or the CEO who might be in my district office next week.
Based on emails I was copied on, he seems to have buried the ax with Einhorn
Barry,
With regards to accounting, could you explain what is different between what Lehman Brothers did in 2008 to what is being done with banks now and since early 2009?
Seems to me it is the same game. The only difference is Congress through the FASB have changed the rules to make this sort of behaviour acceptable, condoned, and now rewarded.
Think about those who proceeded using these types of accounting off-balance sheet gimmicks and tricks: Enron and Lehman comes to my mind.
Does everyone remember how they ended?
Barry,
Nice piece. Hopefully Charlie shows some character….
IMO, the public’s knowledge of what is short selling and naked short selling, and their understanding the critical role played in equity markets by short sellers, are the two most important subjects that must be corrected; for the good of the nation. If the public at large really understood these things, then I think the eye would begin to rightly turn back to be cast on the true source of market ills.
HCSKnight
With all the billions and billions of dollars that pass through the Social Security system, I don’t ever recall hearing a big scandal or anything less – it’s always been handled very responsibly. Yet, in the private sector, many of those in charge are complete shysters and frauds. What was the argument again that we had to give these people control over our money?
“Charlie, What do you got?”
“I don’t have what I got”
Apology? He needs to do a lot more than that. . But then, it’s this attitude that got him on to the show in the first place…
I just had to comment about the video remarks on how Lehman management is totally engaged.
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