Looting, Wall Street Style
A House Committee is uncovering machinations of Lehman execs before the firm’s collapse:
One Lehman document among thousands reviewed by the House committee showed that four days before the bank filed for bankruptcy protection, Lehman’s compensation committee was asked to grant $20 million in “special payments” for three executives who were leaving, Mr. Waxman said. An e-mail exchange recommending a delay in bonus payments was apparently brushed aside.
Another document showed that executives were warned in a January 2008 meeting that the company was facing liquidity problems. Yet the firm moved forward with capital outlays, including $5 billion in bonuses, $4 billion in shares and $750,000 in dividend payments between 2007 and the firm’s bankruptcy filing on Sept. 15.
Do they teach this in business school? I hope at some point all the deans of major B-schools read Rakesh Khurana’s From Higher Aims to Hired Hands: The Social Transformation of American Business Schools and the Unfulfilled Promise of Management as a Profession. As Tom Ashbrook noted in a great podcast on the topic, Khurana describes how “business schools have failed in their promise; . . . they are turning out hedge fund hotshots who don’t build companies but tear them down.” And i-bankers who might be hard to distinguish from looters.