Overview
Main description
How Excessive Risk Destroyed Lehman and Nearly Brought Down the Financial Industry
“Uncontrolled Risk will ruffle feathers—and for good reason—as voters and legislators learn the
diffi cult lessons of Lehman’s collapse and demand that we never forget them.”
Dr. David C. Shimko, Board of Trustees, Global Association of Risk Professionals
“Uncontrolled Risk is a drama as gripping as any work of fiction. Williams’s recommendations for
changes in the governance of financial institutions should be of interest to anyone concerned
about the welfare of global financial markets.”
Geoffrey Miller, Stuyvesant Comfort Professor of Law and Director, Center for the Study of
Central Banks and Financial Institutions, New York University
“The complex balance of free enterprise on Wall Street and the healthy
regulation of its participants is the central economic issue of today.
Williams’s forensic study of Lehman’s collapse may be the best
perspective so far on the issues that now face regulators.”
Jeffrey P. Davis, CFA, Chief Investment Officer,
Lee Munder Capital Group
“Provides a very perceptive analysis of the fl aws inherent in risk management systems and modern
fi nancial markets. Mandatory reading for risk managers and financial industry executives.”
Vincent Kaminski, Professor in the Practice of Management,
Jesse H. Jones Graduate School of Business, Rice University
“Gives the reader much food for thought on the regulation of our financial system and its interplay
with corporate governance reform in the United States and around the world.”
Professor Charles M. Elson, Edgar S. Woolard Jr. Chair in Corporate Governance,
University of Delaware
The risk taking behind Wall Street's largest bankruptcy . . .
In this dramatic and compelling account of
Lehman Brothers’ spectacular rise and fall,
author Mark T. Williams explains how uncontrolled
risk toppled a 158-year-old institution—and what
it says about Wall Street, Washington, D.C., and the
world financial system. A former trading floor executive
and Fed bank examiner, Williams sees Lehman’s
2008 collapse as a microcosm of the industry—a
worst-case scenario of smart decisions, stupid mistakes,
ignored warnings, and important lessons in
money, power, and policy that affect us all.
This book reveals:
- The Congressional inquisition of disgraced
CEO Dick Fuld: Did he really deserve it?
- How the investment-banking money machine
broke down: Can it be fixed?
- The key drivers that caused the financial
meltdown: Can lessons be learned
from them?
- The wild risk taking denounced by President
Obama: Is Washington to blame, too?
- The ongoing debate on reform and
regulation: Can meaningful reform avert
another financial catastrophe?
This fascinating account traces Lehman’s history
from its humble beginnings in 1850 to its collapse
in 2008. Lehman’s story exemplifies the everchanging
trends in finance—from investment
vehicles to federal policies—and exposes the
danger and infectious nature of uncontrolled risk.
Drawing upon first-person interviews with risk
management experts and former Lehman employees,
Williams provides more than just a frontline
report: it’s a call to action for Wall Street bankers,
Washington policymakers, and U.S. citizens—a living
lesson in risk management on which to build a
stronger fi nancial future. Williams provides a tenpoint
plan to implement today—so another Lehman
doesn’t collapse tomorrow.
Includes a
ten-point plan to
ensure a strong
financial future for
both Wall Street and
Main Street
Table of contents
1. The Inquisition
2. Lehman: From Humble Roots to Wall Street Contender
3. From Private to Public
4. History of Investment Banking
5. How the Investment Banking Money Machine Works
6. The Roller-Coaster 1980s
7. The 1990s: Rebuilding Years
8. Lehman's Near Death Experience
9. Innovation, Imitation and Increased Risk: Mortgage-Backed Securities
10. Lehman's Risk Management
11. The Real Estate Bet and the Race to the Bottom
12. The Bear Mauling
13. Time Runs Out
14. The Death of Lehman, Regulation, and Investment Banking
15. The Eneablers and the Deciders
Epilogue: The Post-Lehman Financial Landscape
Appendix: Lehman Brothers Chronology of Key Events
Author comments
Mark T. Williams is a risk management practitioner
and academic with two decades of experience.
He has worked as a senior executive for major
energy trading companies, a trust banker, and an
examiner for the Federal Reserve Bank. Williams is
currently on the fi nance and economics faculty at
Boston University and serves as a senior advisor at
the Brattle Group. He has been a guest columnist
for Reuters.com, Forbes.com, and the Boston Globe.
