What Went Wrong at Lehman?


Complinet interviewed David DeMuro, head of compliance at Lehman Brothers during its last days in 2008. It should come as no surprise that the warning signs were there for everyone to see but in the midst of a bubble, employees were too scared to raise their hand because there was still money to be made.

DeMuro did not blame the regulators, saying they were looking closely at the working of the investment bank. He did lay some blame on the Federal Reserve Bank: “The role of the Fed is to take away the punch bowl just as the party gets going. However, in recent times the Fed has chosen to add just a few more shots of vodka to the punch bowl to keep the party going.”

He did peg lots of blame on an over-reliance on financial risk models. There was also an “almost religious belief” in the veracity of the models.

See the webcast yourself (13 minutes): Complinet Interviews David Demuro