Page 147 - (DK) The Business Book

MAKING MONEY WORK 145

bank kept these commercial banks by only 37 percent. Government
alive. The taxpayer took on the bailouts for big business effectively
risks that are supposed to be taken mean that taxpayers are providing
by the private sector. Many support for those who benefit most
analysts suggest that the same is from today’s economic system. In
true in China at present, although the long run, businesses may enjoy
the opacity of the Chinese banking substantial profits, and accept the
system makes this hard to verify. rewards as recompense for the risks
they take. But if the risks (and losses)
Who bears the risk? are borne by the taxpayer, it is fair
Roubini’s statement that losses to question why only shareholders
are “socialized” (borne by the public) gain the profits in the good times.
while profits remain in the private Often, employees and suppliers
sector appears to be true. Income bear higher levels of risk than Richard Fuld
inequality has widened considerably seems fair—shareholders, who
around the world in recent decades, enjoy the rewards of success, should Richard “Dick” Fuld was born
in 1946 in New York City, NY.
in countries including the US, bear the primary risk of failure.
He graduated from the
UK, China, and India. For instance, Even trade-union protection for
University of Colorado in 1969,
between 1979 and 2007 in the US, workers has been eroded in recent
and received an MBA from the
the income of the top 1 percent of decades—in the US and many
Stern School of Business in
earners rose by 266 percent, while countries around the world, unions
1973. He was CEO of Lehman
that of the bottom 20 percent rose account for no more than 10 percent Brothers investment bank
of private-sector employees, which from 1994 to the day of its
leaves workers unprotected when collapse in 2008, and during
Greek citizens protest in Athens things go wrong. Although labor
against austerity measures in 2011. that time, he received more
Rescue loans from the European Union flexibility has its merits, imbalance than $500 million. Known as
to Greek banks mean that the country between “my risk” and “your the “Gorilla of Wall Street,”
faces years of economic hardship. reward” has perhaps gone too far. ■ Fuld was the domineering
boss who pushed the company
into the subprime mortgage
business. For many critics, the
decision that illustrated his
hubris was his refusal of
bailout funds from investor
Warren Buffett and the Korea
Development Bank, even
though Lehman Brothers was
in the throes of being toppled
by the 2008 credit crunch. His
reasoning was that the offers
of cash did not match his own
valuation of Lehman Brothers.
Following the company’s
bankruptcy in September
2008, Time Magazine named
Fuld as one of the “25 People
to Blame for the Financial
Crisis,” and Condé Nast
Portfolio magazine ranked him
number one on its list of “Worst
American CEOs of All Time.”