He seemed unable to acknowledge that, in regards to this particular deal, neither Fuld nor Lehman had a strong hand. According to Sorkin, unwilling to admit that his firm was in serious distress, Fuld continued to insist that the Koreans take these distressed assets. Fuld, according to Sorkin’s account, could not accept the Koreans’ valuations of some of Lehman’s most distressed assets, especially its mortgage-backed securities. While news reports at the time indicated that the Koreans backed out on account of the concerns of their regulators, the account provided by Andrew Ross Sorkin’s Too Big to Fail places the failure of the deal squarely on Fuld’s shoulders. This tight identification was detrimental when the Fuld-led Lehman team was negotiating at the 11th hour with the Korea Development Bank in the hopes of receiving a capital injection to stabilize the troubled firm. Having led Lehman for over two decades, Fuld viewed Lehman as his firm, and the employees as his people. According to reports, Fuld’s personal identification with Lehman Brothers was nearly total. Richard Fuld and the Collapse of Lehman Brothersīoth Fuld’s ascent and management style have been widely documented. One of the most well known examples concerns Richard Fuld, the executive who presided over both the rise and fall of Lehman Brothers. The recent financial crisis provides multiple examples of overconfident decision makers. We do not need to look back to intrepid early 20 th century adventurers to find examples of this type of overconfidence. Overconfidence in the Financial Services Industry Problems emerge when decision makers act on the basis of these inappropriate (and usually overly optimistic) beliefs. For the purposes of our paper, we can define overconfidence as possessing an unwarranted confidence in the correctness of one’s judgments. Shackleton’s experience points towards the double edged sword of what psychologists call “over-confidence”. One of the most valuable lessons I received from my father is “our greatest strengths can be our greatest weaknesses.” Shackleton’s confidence in his mission was such that he proceeded with his journey in spite of several important facts (1) local whalers reported the Antarctic waters were more choked with ice than at any other time in living memory, (2) although the Endurance was equipped with a radio receiver, Shackleton did not purchase a transmitter and finally, (3) while the crew was well outfitted for dry-land trekking, they lacked the waterproof boats and clothing which would have been of great help in the world of water and ice.
Surely, this is the sort of confidence and optimism we want in our business leaders, isn’t it? The continuing influence of Shackleton’s story results from his unshakable confidence that he would lead his crew home alive. Amazingly, Shackleton and his all of his crew survived and returned safely to Great Britain. The men were shipwrecked for almost two years until a small contingent was able to reach an isolated whaling station at Stromness Bay and seek help. In October 1915, when their ship was destroyed by the shifting ice floe, Shackleton and his crew were forced to abandon ship and ‘make camp’ on the ice. Powerless, Shackleton and his crew drifted in the pack ice for 9 months. In January 1915, shortly after it set sail, the Endurance, led by famed explorer, Ernest Shackleton, became trapped in the pack ice of the Weddell Sea.
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