Lehman risk head speaks out
DAVID DeMuro, the head of compliance at Lehman Brothers during the US investment bank’s spectacular collapse last year, has admitted nobody at the firm heeded warning signs it was taking on unsustainable risks.
Speaking out for the first time since the bank failed, sending devastating ripple effects through the global economy, he said he should have spoken out more about concerns.
Describing the environment before the collapse he said: “When there’s still money to be made, it’s very difficult to walk away. The last few days at Lehman Brothers were a very surreal experience – there was disbelief – nobody anticipated the firm would collapse.
“There was a general understanding of the risk but there was also an almost religious belief in the veracity of the business model,” he said in an interview with Complinet.
Chris Pilling, chief executive of Complinet, which advises 80 per cent of the FTSE 500 on risk, said DeMuro’s remarks come at the dawn of a new age of the compliance officer. He said new regulations to come will tie staff bonuses to treatment of risk, and chief compliance officers will work at a board-room level for the first time.