Life Inside a Battered Brokerage Firm

Sept. 15, 2008 — -- As the country's fourth-largest investment bank unravels, the more than 20,000 employees of Lehman Brothers have to contend with uncertain job prospects, plummeting stock holdings and the resulting emotional distress.

John Ryding can empathize.

Ryding was the chief U.S. economist at Bear Stearns when that investment bank collapsed in March and was purchased at a fire-sale price by JPMorgan Chase.

"It's not a period of my life that I would want to wish upon anyone," Ryding said. As the JPMorgan deal came together – the firm eventually purchased Bear Stearns for $240 million – there was disbelief, anxiety and eventually anger among some Bear Stearns employees.

"I don't know how many phases of grief that there are," Ryding said. "I think most people went through all of those phases."

Part of the employees' grief, he said, came from the fact that the price that Bear Stearns was eventually sold for – about $10 a share – meant that employees saw the value of their own Bear Stearns investments largely evaporate.

"It destroyed the wealth that a lot of people had built up over the years," he said.

And Ryding said that employees were unnerved by a lack of guidance from senior management during the meltdown.

"When it came to handling morale, I think a lot of people felt they were left hanging," he said.

A person familiar with the situation at Lehman indicated that, last week, communication there wasn't any better.

"There's no information filtering from top management down even to the heads of trading desks, so they don't know much about what's happening," he said. "I'm sure they're looking at the TV screens like we are."