Monday, September 15, 2008
A 158 year old company that has never reported a negative quarter of earnings (while public) has now vanished from the financial landscape. While many are blaming Lehman's fall from grace on the CEO's hubris, Lehman is not the only Wall Street bank being led by "hubris".
In my opinion "Wall" Street's name should be changed to "Hubris" street. This final culmination of events that started with Bear Stearns has led to a meltdown in institutions that thought they were smarter than everyone else and that the normal rules didn't apply to them.
Of course, it wasn't just Wall Street, the federal government and their Government Sponsored Entities also contributed their own Hubris. Before you jump on the Bush administration be careful, this crisis was brought about in a bi-partisan manner. Democrats in congress as much as Republicans are to blame for a severe lack of regulation which was brought on by huge amounts of lobbying dollars. It looks like congress finally did something in a bi-partisan way, tear down our financial system. You can bet that they won't take responsibility for it. You can bet they'll hold hearings and we'll watch as Democrats vilify Republicans and Republicans vilify Democrats and both vilify some now invisible financial institution - then they'll pass a series of laws (in another bi-partisan manner) that will go way to far and hurt what will be an inevitable recovery.
It was quite a weekend on Hubris Street, one that will be written about.....and repeated decades from now when we have all forgotten this financial crisis.
I know that all of this is not easy to take, especially when you open up your financial statements, but panic is not an option. This too shall pass.
Scott Dauenhauer CFP, MSFP, AIF