One of the reigning myths about the financial crisis of five years ago is that the class of Wall Street titans dubbed “The Masters of Universe” by Tom Wolfe got off scot-free, while the rest of us were left to suffer. In the broadest sense, that is basically true. But in a more specific sense, it isn’t. One Master of the Universe who fell faster and further than just about anybody else was Dick Fuld, the chief executive of Lehman Brothers. I wrote about Fuld’s fall and his afterlife for Bloomberg Businessweek’s special issue on the five-year anniversary of the financial collapse.
The “too long, didn’t read” version? Fuld is all but ruined, professionally ostracized, and in real financial peril because the $250 million insurance policy that Lehman Brothers took out to cover its senior management in legal jeopardy has been exhausted—yet a number of the dozens of legal actions brought against those managers are still outstanding. Guess who is now footing the legal bills and the settlement payouts: the (former) Masters of Universe themselves.
As Bloomberg News reported yesterday, one big case against Fuld and other former Lehman managers has just been settled. A group of California cities and municipalities that collectively lost tens of millions of dollars when Lehman Brothers, at the time the country’s fourth-largest investment bank, filed for bankruptcy on Sept. 15, 2008.
The defendants, including Fuld, agreed to pay $9.75 million. And as one of the California officials who brought the suit made clear, proceeds of the settlement “are coming directly from the assets of the defendants.”
A multimillion-dollar payout will hardly leave Fuld in the poorhouse. As of September, Fuld still owned mansions in Connecticut, Idaho, and Florida. But as I noted then, friends say Fuld has lost $1 billion. Now he’s lost some more. And there are still cases outstanding. Certainly, plenty of people have fared worse since the collapse, probably millions of them. But it’s worth noting that a certain kind of justice is slowly but surely taking its toll on some of those who were responsible for the crisis.