Lehman Brothers CEO Dick Fuld is not giving up on the independent investment bank model despite predictions by pundits that brokerages will have to look for commercial bank partners to tide over future crises and sustain growth.
“I believe in the model. I believe the value of what we have created in the past for shareholders can be created again,” Fuld said on a conference call after Lehman’s quarterly results.
Lehman posted a quarterly loss of $2.8 billion, matching its forecast, after recording massive trading and hedging losses.
Experts say stand-alone U.S. investment banks such as Lehman are likely going to have to find commercial bank partners to get access to a stable source of funds. That will help them deal with future shocks and to sustain growth even if regulators restrict leverage.
Fuld did keep the door open to potential suitors, saying if someone came up with an offer that made sense, “I clearly have the obligation to take that to the board.”
“If the model changes, so that … banks are the only way to go, then that is a model that has to be considered,” Fuld said. “But today, the power of this franchise, we can very much go it alone and be very strong.”
(Photo credit: Reuters)