WHY DID YOU WRITE LEHMAN BROTHERS: A CRISIS OF VALUE?
I'm fascinated by the causes of the financial crisis, because I felt at the time that the global financial system was about to fail. The trigger for the meltdown in 2008 was the collapse of Lehman. How could a company whose assets were worth $639bn one day be worth nothing four days later? This book examines the meaning of value, which is necessary to understand how that happened.
WAS THE COLLAPSE A SYMPTOM OR A CAUSE OF THE FINANCIAL CRISIS?
It was certainly a trigger for the collapse of liquidity. It destroyed trust between the financial institutions, since it was impossible to be sure of the value of the assets any one of them held. But it was neither a symptom nor a cause. It was part of a mosaic of failures-of-governance, risk management, regulation and supervision.
WHAT DOES DICK FULD'S LEADERSHIP OF LEHMAN TELL US ABOUT THE DIFFERENCE INDIVIDUALS MAKE TO EVENTS?
A lack of restraint on a dominant figure matters. Fuld was chairman and CEO with a weak board, operating in an inadequate regulatory and legal framework. That meant he could set aside risks in the belief he could ride out the storm.
Lehman Brothers: A Crisis of Value by Oonagh McDonald is published by Manchester University Press at £20
Oonagh McDonald is an international financial regulatory expert and was an MP from 1976-87.