How did the Lehman Brothers class of ’08 fare?

On the morning of September 15th, 2008, Nadia-Elisabeth Seemuth, an analyst in Lehman Brothers’ fixed income division, heard that her employer had filed for bankruptcy. She remembers looking at the office walls, thinking: “It doesn’t exist any more. The whole thing. It’s a sham.”

The bank’s collapse – one of the largest bankruptcies in history – changed the direction of her career. She retrained as a lawyer and worked at Clifford Chance. Yet even a huge “magic circle” law firm, she reasoned, could “stop in a heartbeat”. Friends who have not been through the same experience, Ms Seemuth says, do not imagine it could happen to them.

Risk aversion

“Talk about risk aversion,” she says. “I don’t think I would have been so prone if this hadn’t happened.” As a lawyer (now working in-house) she is paid to “think of all the worst-case scenarios. Which I think was the exact opposite of my time at Lehman.”

That formative experience means that today, she does not take any job or company for granted, “which might not be a bad thing”. And she has become cautious. “People say ‘save for a rainy day’. Now I know it could rain on you any time. So just make sure you have an umbrella.”

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Almost 10 years after the Lehman bankruptcy, we spoke to some of the bank’s analysts – junior recruits, such as Ms Seemuth, who were at the start of their careers in 2008 – to discover the impact that the collapse has had on their working lives.

Boom and bust

Elizabeth Nyeko recalls her optimism when she got her first job at Lehman, a feeling reinforced by a confident banker telling her that the boom and bust cycle had ended. Ms Nyeko thought that “everybody had figured stuff out”.

Before the collapse, as one female junior banker recalls, “we saw rounds and rounds [of redundancies] – you are prepared. No one in that building thought their job was 100 per cent secure. But the fall of Lehman is different.”

As another former employee points out, the experience of losing his first job pales next to “the wider ripple effects in the aftermath of the bankruptcy. [They] were much worse – and for so many people across the globe who had nothing to do with Lehman or finance.”

Their individual accounts are diverse and contradictory, but it is clear these former junior bankers learnt lessons from the experience that they have carried with them ever since.

Bonding

Many former Lehman bankers speak of a camaraderie and feeling grateful that they had received good training and worked with bright people. In part, that was forged by the bank’s hard-working culture. One man who worked in London remembers his parents visiting him, but his day was so busy that he only had time to take them out for a quick coffee. When they questioned his long hours, he replied: “This is what you have to do.”

The element of shared experience was, and remains, important. “There is a Lehman’s network and community,” says one. “We meet every year or two. People show up and reminisce. That analyst class was the biggest [they’d ] had. We felt quite special when things were going right. The flipside was you felt even more awful when things [went ] wrong.”

Because so many people were made redundant at once, as one former analyst observes, the “network of former Lehman employees is relatively unique – nearly everyone needed to find a new job and many ventured out into other industries.”

Powerlessness

Moritz Poehl, a former analyst in the telecoms, media and technology division of Lehman’s investment banking department, says: “I drank the Kool Aid. I felt we were kicking ass.”

After the collapse he realised that he was a tiny cog in a massive machine. “You had no control over someone pressing the wrong button on the wrong floor . . You felt totally helpless.”

One man who describes himself as coming from “a poor background”, says that after seeing Lehman as his big break, he was determined to hang on to his job and in fact continued to work for Nomura, which bought the investment banking and equities operations.

“I never panicked. I was so naive . . I just got on with it.”

CV points

While some of the former bankers we talked to had thought about taking Lehman off their CV, more often they found it was a talking point. “I thought it would be a bad thing, says Ms Seemuth. But in fact, people are interested: “It is witnessing history . . .In interviews people always want to find out about it.”

Youth on their side

There was acknowledgment among the analysts of 2008 that, as twenty-somethings, they had far less to lose than older peers who had got used to a lifestyle they could no longer support.

“To experience something like this at the early stage of one’s career is not a bad thing,” says a former analyst who joined in 2007. “One is flexible and can learn quickly and make these lessons useful.”

Living with uncertainty

Six months into her career at Lehman, Hephzi Pemberton felt that “things were going wrong. I couldn’t see the pathway through.” She was headhunted away from the bank to work for a recruiter five weeks before the collapse, but her experience made her learn to accept uncertainty – and plan for it. “We’re going through an interesting time. There’s lots of uncertainty. When you’ve been through that early in your career [it] helps you get through it.”

Suspicion

One former banker, who now works for a venture capital fund, found the collapse sparked “disillusionment”. He says: “It has made me suspicious about business models and [promises about] investments. It makes you wonder if we are now in another scenario where people don’t understand the complexity.”

Another, who now works in private equity, says he is conscious that “what goes up must come down. It helps me analyse the economic cycle. I’m very confident that it will go down – not like 10 years ago, but it will go down.”

Abhik Das, formerly in the leveraged finance team at Lehman and now head of private debt at Golding Capital Partners, says he is concerned that “current bankers and private equity professionals act as if Lehman had never happened”.

Self-reliance

The bankruptcy made Lehman’s last juniors resilient. Charlotte Ravouna, formerly of the bank’s capital markets sales division, says: “You realise your value is yourself. You can’t depend on a brand or a bank.”

Others switched career, like Ms Seemuth, or set up businesses. Ms Nyeko moved out of finance, working for a charity and studying before founding a tech company. “I wanted something more tangible.”

– Copyright The Financial Times Limited 2018