What did the Lehman Brothers implosion look like to a techie?

Informative article, but gads! Did anyone actually proof-read it beforehand?

I remember watching you guys coming out on the Monday from the CitiGroup building, sad day and one of those "for the grace, there go I" times.

D

So why did Lehman's not survive September 2008? Partially bad luck, with possibly an element of LB being picked to be the fall guy

After Bear Stearns imploded in March

Think the last one explains the other two ... Bears Stearns was not allowed to collapse like Lehman's did so it sent a message to the banks that they wouldn't be allowed to collapse so no need to worry unduly. Then authorities realized how this message had got across and decided that an example needed to be given and Lehman's were in the wrong place at the wrong time. Of course, that they had the opposite effect of total panic which meant the authorities had to go back to the "this can't happen again mode" with the hope that people would also think "... but then again, they did let Lehman's go".

Gnab Gib

If I could up vote articles, I'd do it just for that reference.

Toxic

The Lehman (highly expensive) low-latency trading platfrom which ended up at Nomura has now been passed on to subsiduary Instinet. So a large chunk of the same people are getting a 3rd bite of the cherry to try and get things right.

On a personal note having been through several year's worth of purges while Instinet dragged its way to balancing the books we've now had a complete platform (and associated staff, costs and politics) dumped on us. The up side for me is that I get to play with some new kit and expand my skillset. But integrating the platform is a nightmare and we're effectively facing a reverse takeover.

Not quite...

Lehmans keeled over quite simply cos of the two scottish twerps and the dangerous driver; aka Alastair 'Captain' Darling' the then prime minister Gordon Brown and a guy you've probably never heard of called Hector Sants - and I hope for his sake the police don't read Too Big to Fail..

Bob Diamond & Barclays had agreed with the fed and Lehmans to take them over as a RUNNING CONCERN, the three gormless idiots at the very last second blocked it for fear of the UK system being 'contaminated'. By all accounts, Bob went (understandably) nuts, the Fed ended up effectively forcing Lehmans to chapter 11 and the International banking scene ended up looking like a Cross between Omaha Beach and the Battle of Stalingrad...

Well done, Darling, well done...

For the long version; Andrew Ross Sorkin, Too Big to Fail.. available from all good bookshops and probably Apple too..

The ant's eye view

Here I was expecting an exposé.

Ah well, the best dirt is kept by the lads at the top, as per usual.

Brings back memories

I was at LB when it crashed on my university industrial placement working in Windows Server and Exchange Admin. The week before it all went tits up I was working on upgrading exchange to 2007. Still, it was one of the most interesting events in my career to date, a big learning experience and a source of experience I still use today.

Tech & Trading... My own expose about a Trading Desk that was more geeky than IT...

The team I worked on included some of the brightest individuals one is ever likely to meet: Nasa scientists, ex Jet Propulsion Labs engineers and mathematics professors. Then there was the streetwise crowd too- cocky traders with huge self-belief but few qualifications. Both groups had bucket-loads of talent and plenty of charisma. My job was to design real time number crunching spreadsheets and back-end systems to help the team trade their latest ideas and hunches.

While this was an amazing environment to work in, I soon realised that I had landed myself in a workplace that was even more geeky than IT. The traders were completely obsessed with numbers and how they moved and where they were going. If these guys worked in any other area of life, I was convinced that not a single girl would ever talk to them. My immersion in the world of markets brought me back to my early days as an IT student, as I found my brain saturated by endless abbreviations, acronyms and nicknames.

Welcome to the wonderful land of banking, a place overshadowed by mysterious institutions with Pythonesque names such as Fannie-Mae, Freddie Mac, and Ginnie Mae. The magical language of this fantasy kingdom included such spells as Butterflies, Steepners, Flatners, Asset Swap Spreads and Bermudan Swaptions.

Apprentice sorcerers were trained to manifest monetary magic out of thin air. Successful apprentices who became wizards were sure to find their dreams of early retirement come true. These Masters of the Universe were intelligent, but ultimately aggressive trolls who stalked the trading floors, bending numbers and markets to their wills. Many teleported themselves into their own hermetically sealed worlds.

The trading citadel was also filled with goblins and ghouls, but they were mostly assigned to the back office away from the sunlight to carry out the grunt work. I was a troll by the way—at the upper end of things, but still devoid of sunlight. I reported to a warlock called ‘Big Dog’ who was the ‘grand wizard’. It did not take long for the novelty of this highly eclectic working environment to wear off. This was a highly competitive cutthroat world, where nothing, absolutely nothing mattered except the bottom line. One slip or a show of weakness and you’d be cast out of the magic kingdom forever.

Traders are mavericks by nature, wildly independent and frequently rebellious. In many respects, the trading floor is like a street gang. There are no bosses in big offices as such, but there are ‘‘Big Dogs,’’ although they can often be hard to single out. On a typical day the loudest traders are often the weakest earners and the biggest guns are the least visible. You can always tell who the ‘‘Big Dog’’ is during bonus season though, because he is the one sitting in the middle of the desk spinning all the stories. The bigger a year a trader has, the more weight they carry on the desk and the more time they get centre stage.

Who is the biggest Dog of all the Big Dogs? Answer: 99% of the time he is the quietest. That is until the shit hits the fan and then you can hear him howl louder than any of the other Big Dogs put together! My Big Dog was as big as they got and I had the privilege of being in his inner kennel. Whether it was the tabs he picked up in top-steakhouses or tops he took off in cat-houses, his appetite for life was full-on.

Indians

We all know the real reason Lehman went under: Indians. They hired huge numbers of them and Wipe-Pro took over their software projects just a few years before they went under.

More insight and honesty would have been nice

For instance, insight into the farce over the London computer systems - Nomura acquired them all, only for BarCap to learn too late that they contained critical information and services pertaining to the running of the businesses that BarCap had just acquired. Cue embarrassing exchange where BarCap has to do another deal with Nomura to get hold of the former Lehman kit required to actually run the old Lehman business.

And more honesty relating to the BarCap situation - anyone at BarCap during the integration phase and even now will tell you an awful lot about the ex-Lehman workers that are still there, running their own former Lehman systems often with 2-3 times the headcount of the equivalent BarCap system despite processing significantly less volume than BarCap, refusing to help work on or learn the BarCap systems, all the while protected by ex-Lehman execs.

It's hard to reconcile these workers with the picture of the classy institution the author has attempted to paint.

Brings back memories

I was there between 2005 and 2008, and later with Nomura for a few years. I was in a back-office techie role.

The "segregation" effort between BarCap/Lehman/Nomura was an interesting time. When BarCap bought Lehman US they slung up fibre between their NYC offices, and the same thing happened in London with Nomura and Lehman Europe. This meant that we were in the interesting situation that we had connectivity between three different banks' corporate networks for a while. Of course, they installed firewalls on these links but that wasn't always effective. For example, to make any MS Exchange traffic work between companies they had to allow all of it through the firewalls. This led to Nomura employees being able to lookup all BarCap employees in the global address book (and possibly vice versa?) until the Exchange team figured out some filters.

As per AC @ 18.02, Nomura did acquire all London systems from PwC (at least Equities as part of the acquisition, and later FID systems through a purchase). But Nomura lost out on many of the core systems that were predominantly provided by Lehman US (e.g. LehmanLive, which was ultimately adopted by BarCap as their web platform). Ultimately they ended up making exchanges for various systems (there was probably money involved too, I wasn't privy to that). Lots of developers who had worked closely with their counterparts on the other side of the pond ended up doing their own little exchanges too, off the books of course.

As the author says, the Nomura/Lehman "integration" was far from roses. I remember attending an integration dinner (where our respective teams from the two companies were supposed to bond) and only former Lehman staff showed up. Things got better, but slowly, and there were always turf wars.

There's a lot of other interesting technology stories from that time - they always make me smile. Thanks for documenting some of it for future readers!