Thursday, June 12, 2008

Too Much Play For No Grey

Six months into one of investment banking's toughest jobs, the 42-year-old Ms. Callan is emerging as a galvanizing force at Lehman and a finance chief who topples much of the conventional wisdom about CFOs. She also is the highest-ranking woman on Wall Street. Many Lehman insiders consider her among the contenders to become the firm's president someday.

Wall Street Journal 5/17/08

As Lehman's management has lost all credibility during the past few weeks and the stock has fallen off a cliff (chart here) there's one question I keep thinking about: Why would one of the most important Wall Street firms have a CFO who's barely out of her 30's? Erin Callan, 42, was demoted today after less than a year on the job. Her age indicates that, with one short interruption, Callan has seen only one market cycle her entire career: up. No matter how competent the employee, letting someone that young anywhere near risk management for a firm like Lehman is folly. Most of those I know on Wall Street in their late 30's/early 40's are competent, smart, and on the ball. But their formative career experience was the mid to late 1990's. Not one of them knows anything about economic cycles or has any sense of market history, and in a down cycle I wouldn't own stock in any firm they managed. Unless Callan was a rare exception in that regard, Lehman's disaster shouldn't be that surprising. Of course responsibility for her appointment lies at the top with Dick Fuld, who today named Ian Lowitt to replace her. Lowitt's age? 44.

This is basic stuff. If you have a financial advisor, money manager, or you own stock in a large and complex company (particularly one that has anything to do with the financial industry) check for some grey hair. It might save you some heartache.


Anonymous Anonymous said...

On the other hand, if you're just looking for a fall guy inexperienced is a positive trait.

6/12/2008 7:33 PM  
Blogger wendyo said...

Hillary says she was demoted for being a woman.

6/13/2008 9:59 AM  
Anonymous Anonymous said...

....aaaaaaand what's it say over on the upper right of this blog? Early forties? Only a couple of years ago, that paragraph changed from "late thirties," I remember it happening. Yet our host seems to have a very keen grasp of economic cycles and how geopolitics relates to markets. There can always be exceptions to the rules.

Not to deny the basic point of your post, I just found it very ironic. Please don't go all "You-Kids-Get-Off-My-Lawn" on us prematurely, TCR!

6/13/2008 1:41 PM  
Blogger The Cunning Realist said...

As I wrote: "Unless Callan was a rare exception in that regard"....

Nothing I've read or heard about her indicates that she is.

6/13/2008 2:08 PM  
Anonymous Anonymous said...

I agree with your post. It applies to more than just the financial industry. I often go looking for old grey haired white men to do business with. That doesn't sound very cosmopolitan in today's society but they seem to be the only people left with any integrity.

6/14/2008 3:47 AM  
Anonymous Anonymous said...

"...old grey haired white men to do business with... people left with any integrity." - a joke, I hope. Seriously. Oh my lord. Where has our commonsense gone.

Have we forgotten the recent stock market bubble already - Grubman, Bernie Ebbers, Sandy Weill, Rigas, Lay, Kozlowski, Skilling. Which reminds me that the whistle blower was a very capable woman. Not that it matters, but Watkins was 42 at the time.

Or the Keating 5, or the Savings & Loan Crisis.... and who lied in this Administration to take us to war. Iran-contra affair, Watergate.

A person's character, intelligence, capabilities, are not measured by the color of one's hair, or anything similar to that.

There's many ways to review this story, but the conclusion is not up to this blog's usual high standard. Suppose everyone needs to roll in the mud sometimes :-(

'On the other hand, if you're just looking for a fall guy inexperienced is a positive trait.' - Probably makes the most sense.

6/16/2008 11:17 PM  

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