Lehman Brothers: Five Years on

WALSALL, U.K. - Sept. 17, 2013 - PRLog -- PricewaterhouseCoopers' Tony Lomas couldn't believe US authorities let Lehman fail. With eye watering and very scary sums of money quoted even for Tony who had dealt with other high profile failures such as Enron and the Maxwell Empire.

As 8 o clock approached on the fateful day Tony could only wait and watch the mayhem that would unfold as payments became due.

Even five years on, he admits he finds it hard to believe that the US authorities allowed Lehman Brothers to fail, causing the domino effect on its entities around the world. Lomas recalls: "I was disbelieving that it could have been allowed to happen because I could see what would unfold would be immense."

The events that unfolded that weekend have now gone down in history as some of the most dramatic in the financial world. No one had expected Lehman Brothers to fail – the US authorities had orchestrated a takeover of another troubled firm Bear Stearns only six months earlier – and the decision by the US to refuse to rescue it led to fears about the stability of other banks.

Five years ago, his concern had been about the risks of taking on a job that was so big and unprecedented. "I was thinking about the big risk for PwC. Would we be able to control the risk? The value would be eroded and we would be blamed and it would take a long term to control the situation. When stakeholders and customers of the bank are at risk of losing hundreds of millions or billions of pounds, situations can become very litigious and those are very scary numbers to be litigated," he said.

The experience led to his discussing with regulators ways to draw up contingency plans for banks in the future. Ideas like this have become known as living wills – though five years on from the crisis few are yet ready to be tested and Lomas gesticulates that such a plan could easily create a 2ft-high paper stack. If he had one for Lehman, it "might have removed 25% of the uncertainty and reduced the instability and the chaos, but people would still have panicked".

This month he intends to make another payment to creditors on top of £13.6bn already handed back and admits that the 10-year lease in the corner of Citigroup's tower in Canary Wharf will expire before the job is done. He will have retired – PwC requires partners to leave at 60 – but he can already see creditors in Lehman getting their money back, racking up fees of £1bn for PwC in the process.

Griffin and King (http://www.griffinandking.co.uk/)