BernieHund: The Political Watchdog

We saw it coming.  After the June 9th revelation that Lehman was neck deep in losses, we suggested in our post that Lehman would be bundling severance packages.  Today the packages and pink slips were delivered to Erin Callan and Joseph Gregory.  I would have thought we would have seen Chief Executive Richard Fuld, Jr. biting the dust, but he acted first.  He decided to hand the pink slips to Callan and Gregory, perhaps hoping the action would save his position.

The bank said its chief operating officer and president, Joseph M. Gregory, and its chief financial officer, Erin Callan, had been removed from their posts.

Ian Lowitt, 44, now the chief administrative officer, will succeed Ms. Callan, the bank said, and Herbert H. McDade III, 48, global head of equities, will succeed Mr. Gregory.

The changes, effective immediately, come a couple of days after Lehman reported a $2.8 billion quarterly loss.

The bank said Ms. Callan, 42, who became chief financial officer in September, would rejoin the investment banking division. Mr. Gregory, 56, will also remain at the bank, but his position was unclear.

It seems the termination slips were light pink.  Callan and Gregory will still work at Lehman’s, just in lesser roles.  Perhaps, Fuld made the quick move to save his own position. 

He seems to have misjudged the financial situation at Lehman.

The developments mark a stark reversal of fortune for Lehman and for Mr. Fuld, its longtime chairman and chief executive. Mr. Fuld earned accolades — and more than $40 million in 2007 — for steering Lehman through tumultuous markets last year and, two months ago, he proclaimed that “the worst is over” in the markets.

Apparently, Fuld was wrong two months ago.  The worst may be over now in the markets, although some of us doubt that.  If something is done to rectify the “worst” on Main Street, sooner or later it is going to hit Wall Street again.  Don’t put the pink pad away yet.