Too Big To Fail

Fuld was the CEO of Lehman Brothers, the fourth-largest firm on Wall Street, at the time of the financial crisis. Fuld had started at Lehman in a part-time summer position secured for him by his grandfather, and he found that he instantly understood investment banking. His early boss said that he was a “natural” and “didn’t let his emotions get the best of his judgment” (20). Over time, he “earned a reputation as a single-minded trader who took guff from no one” (22). He was an intimidating presence, and his nickname was “The Gorilla” (22).

Fuld became the CEO in 1994, when American Express spun off Lehman’s investment arm, which it has bought in 1984. Over time, he “recast himself as the public face of the firm” (26), with a longtime colleague, Joe Gregory, as his chief operating officer. Fuld had progressed from trader to banker. He worked to increase the company’s stock price and gave shares to employees, with Lehman’s workforce eventually owning one-third of the firm. He had a team mentality, with senior executives compensated based on the performances of their teams, but he “did not so much overhaul Lehman’s corporate culture as tweak it” (27). Seeing the huge profits Goldman Sachs made by investing its own money, Fuld decided Lehman was “too conservative” (27) in its approach. With Gregory executing his vision, Lehman’s “profits and share price soared to unprecedented heights” (28).

Gregory was a close associate of Richard Fuld for nearly four decades. At Lehman Brothers, he was part of the “Huntington Mafia” (23), a group of traders who commuted together from Huntington, Long Island. Later, as Lehman’s COO, Gregory became known as “Darth Vader” for his “heavy-handed tactics” (28) when dealing with personnel matters. One of his “harshest personnel decisions” was sidelining one of his own protégés for seemingly “no reason,” and he also made some “highly unorthodox” (28-29) hiring decisions.

Paulson was the Treasury Secretary during the financial crisis, and he had previously been CEO of Goldman Sachs, where he was the type of banker who succeeded with “bulldog tenacity,” not “wits and charm” (41). He is a devout Christian Scientist. At Goldman, he had helped convince its partners to take the firm public. He was the highest paid CEO on Wall Street in 2005, at $38.3 million. Under Paulson, “Goldman had become the money machine that every other firm on Wall Street wanted to emulate” (46). 

Geithner was the president of the New York Federal Reserve. After four years there, he was offered the position of CEO at Citigroup, which was “an important measure of Geithner’s newly earned prominence in the financial-world firmament and a reflection of the trust he had earned within it” (61). He had previously “detected a certain lack of respect from Wall Street” (61) because he was a Treasury insider without a background as a Wall Street banker, lawyer, or economist. Geithner had worked for Henry Kissinger after attending Dartmouth and the Johns Hopkins School of Advanced International Studies:

Geithner learned quickly how to operate effectively within the realm of powerful men without becoming a mere sycophant; he intuitively understood how to reflect back to them an acknowledgment of their own importance (63).

He joined the Treasury Department during the Clinton administration and then joined the IMF before being recruited to the New York Federal Reserve, where he distinguished himself as a “thoughtful consensus builder” (65).

Bernanke was the Chairman of the Federal Reserve during the financial crisis. He has economics degrees from Harvard College and MIT and taught at Stanford Business School and Princeton.

Thain was the CEO of Merrill Lynch during the financial crisis. He had previously worked with Paulson at Goldman Sachs and was “an ultra-straightlaced executive who was sometimes referred to as ‘I-Robot’” (137). He had an engineering background from MIT and was seen as a “callous technocrat” (137).

Fleming was the president of Merrill Lynch during the financial crisis.

Willumstad was Chairman of the board and then CEO of insurer AIG during the financial crisis. He is a descendant of Norwegian immigrants and came from a working-class background. 

Blankfein, the head of Goldman Sachs during the financial crisis, is the son of working-class Jewish parents and grew up in a housing project in Brooklyn. He attended Harvard on scholarships and financial aid, the first in his family to attend college. He then went to Harvard Law School. He eventually left law practice for J. Aron & Company, a commodities trading company that was eventually acquired by Goldman Sachs.