A $50 million margin call? I'll short Wall Street.

Tuesday, November 10.

745 Seventh Avenue, New York, Lehman Brothers headquarters, 31st floor.

Richard Fuld sat behind the desk that symbolized the highest power of the fourth largest investment bank on Wall Street, his hands gripping the edge of the desk so tightly that his knuckles turned a glaring bluish-white from the excessive force.

He hadn't left the office for forty-eight hours straight.

On the large mahogany table, the second-quarter earnings forecast, which was just released yesterday (June 9), was scattered haphazardly.

Printed on it was a figure that sent chills down Wall Street's spine: the company was expected to record a net loss of $28 billion due to impairment of assets related to mortgage-backed securities (MBS).

This is the largest single-quarter loss Lehman Brothers has ever suffered in fourteen years since it separated from American Express and went public independently in 1994. And this is after the results have been embellished.

But in Fuld's eyes, the $28 billion loss was not what angered and terrified him the most.

What truly sent shivers down his spine was yesterday's disastrous analyst conference call.

He closed his eyes, but the irreversible scene kept replaying in his mind.

Yesterday morning at 10 a.m., after the earnings forecast was released, Lehman Brothers held a conference call with analysts from major Wall Street institutions in an attempt to calm market sentiment.

Originally, this meeting should have been controlled by Fuld himself or by the seasoned COO Joe Gregory, who would have used their usual toughness and confidence to suppress the dissenting voices.

However, Gregory strongly suggested that CFO Erin Cullen lead the meeting.

The reason given was: "Eileen is well-liked by the media and analysts; her approachable image softens the cold, negative statistics."

Fuld agreed.

This is a fatal mistake.

When the call connected, the analysts who were usually so polite to Lehman Brothers completely tore off their masks after seeing the $28 billion loss and David Einhorn's scalpel-like public accusations at the Sohn conference.

The questions rained down on Karen, each one sharp and deadly:

"Ms. Karen, what is Lehman Brothers' actual exposure to commercial real estate? Why is there such a large discrepancy between your valuation model and current market transaction prices?"

Regarding Greenlight Capital's accusation that you have manipulated Level 3 assets, can you provide specific liquidity hedging data?

"Is Lehman Brothers facing pressure on its overnight repurchase financing channels? Do you have sufficient high-quality collateral to handle potential margin calls?"

Karen, the Wall Street star CFO who once chatted and laughed in front of CNBC, sitting in the main speaker's seat, was completely flustered when faced with these questions involving extremely in-depth financial auditing and asset pricing models.

She doesn't have a strong financial background; she was previously just an exceptionally good stock derivatives salesperson.

During the conference call, her answers began to become hesitant and stammering.

She kept using empty public relations rhetoric like "challenging macro environment," "ample liquidity," and "we believe in long-term value" in an attempt to gloss over the past.

But those analysts are the shrewdest and most ruthless strategists on Wall Street.

They immediately sensed the weakness and emptiness in Karen's words.

When a CFO is unable to provide compelling numerical counterarguments when faced with questions about the valuation of core assets, it means one thing—the short sellers are right, and Lehman Brothers was truly rotten.

Before the conference call even ended, Lehman Brothers' stock price began a relentless freefall.

The stock price plummeted by more than 9% in a single day.

Fuld suddenly opened his eyes, grabbed the financial report on the table, crumpled it into a ball, and slammed it against the opposite wall.

"Idiots! A bunch of damn idiots!"

He growled in a low voice, like a wild beast trapped in a cage.

"Bang bang."

There was a knock on the office door, which was then pushed open.

Four people came in.

Leading the way were several senior executive directors of Lehman Brothers, as well as Michael Stern, head of the Investment Management (IMD) department.

Their expressions were extremely serious, lacking the subordinate awe they usually showed when facing Fuld, and instead carrying a resolute air of almost coercion.

Fuld looked at them, his eyes instantly becoming as sharp as a hawk's.

"What are you doing here? I didn't call a meeting."

Several people walked to the desk. One of the senior directors took a deep breath and said:

"Richard, we represent the majority of the Executive Committee and have a message for you."

He paused, looking directly at Fuld:

"Yesterday's conference call was a public relations disaster. Erin (Karen) has completely lost credibility on Wall Street. The market no longer believes a single figure she utters regarding Lehman's financial situation."

Another director chimed in, his tone even harsher:

"And then there's Joe (Gregory). He was the one who approved and spearheaded the company's tens of billions of dollars in bad exposure in commercial real estate over the past two years."

Now that the hole has burst, he can't escape blame. The wealth of Lehman's shareholders and us partners has evaporated by half in the past month!

Michael Stern stood at the very back, silent and observing coldly.

Fuld's chest heaved violently.

He knew, of course, that Karen had messed up, and he also knew that Gregory's aggressive expansion was the root cause of the current situation.

But Gregory was his 30-year comrade-in-arms, Lehman's "second-in-command," and a figure he absolutely trusted. And Karen was the face of the company that he and Gregory had single-handedly promoted.

If they were to be laid off, it would be tantamount to admitting to the entire Wall Street that Lehman's past strategy was completely wrong and that Lehman's management was indeed lying.

This is the ultimate denial of Richard Fuld's personal authority.

"Joe is the CEO! Eileen is the CFO!"

Fuld slammed his hands on the table, his massive body leaning forward, trying to intimidate the rebels with his signature tyrannical aura.

"Are you trying to teach me how to manage this company?! I brought Lehman Brothers to where it is today! We survived the 1998 LTCM crisis, we survived 9/11! We made it through!"

"Richard!"

The most senior director raised his voice and interrupted him without backing down:

"Don't you understand? We're not teaching you how to manage a company anymore! Wall Street is teaching us how to survive!"

He pointed out the window in the direction of the Goldman Sachs and Morgan Stanley buildings:

"Goldman Sachs' prime brokerage division raised our collateral discount rate again this morning! JPMorgan Chase is demanding additional liquidation margin! If we don't immediately find someone to take responsibility and give the market an explanation that we are 'thoroughly cleaning house,' Lehman's funding chain won't last this month!"

"Someone must be held accountable for this $28 billion loss and yesterday's disaster. And the accountability must be high enough."

The director looked at Fuld and said, slowly and deliberately:

"Richard, if you don't act, we will formally move a motion of no confidence against you at tomorrow's special board meeting."

These words were like a cold dagger pressed directly against Fuld's throat.

Either cut off your own left and right arms and bow down to the market to admit your mistakes.

Either get lost or...

A deathly silence fell over the office.

Stern looked at Fuld's face, which was slightly contorted with extreme anger, humiliation, and fear.

He knew that Fuld's defenses had collapsed.

How could this tyrant, who was used to solving everything with roars, accept being kicked out of the house?

Fulder slowly sat back down in his chair.

His bloodshot eyes were fixed on the people in front of him, as if he wanted to etch their faces into his mind.

A full minute passed.

He finally spoke, his voice hoarse as if it were produced by sandpaper.

"Have Joe and Eileen...come to see me."

The directors exchanged glances, said nothing more, and turned to leave the office.

Stern walked last. As he stepped out the door, he glanced back.

Richard Fuld slumped behind the enormous desk, his hands covering his face.

The early summer sunlight shone through the French windows onto his gray hair, but it couldn't illuminate the air of dejection and despair surrounding him.

He was like an aging lion king, forced by the wolves to bite off the neck of his own cub in exchange for a brief period of peace in his territory.

……

Two hours later.

Joe Gregory and Erin Cullen walked out of the CEO's office side by side.

No one knows what they said to Fuld inside, nor did anyone hear the usual signature roar.

Gregory's steps remained steady, but his always impeccably tailored dark blue suit looked somewhat loose at that moment.

He didn't look anyone in the hallway in the eye, walked straight to his office, and began packing his things.

Karen walked very slowly.

Her face was deathly pale, and her exquisite makeup could not conceal the emptiness in her eyes. She clutched a Hermès Birkin bag tightly in her hand, her knuckles white from the force.

As she walked to the elevator, she ran into Stern, who was coming out of another elevator.

The two met face to face.

Looking at this woman who was once radiant on CNBC but now seemed to have her soul drained, Stern felt no pleasure in kicking her while she was down, only a chilling sense of shared sorrow.

"Eileen." Stern stopped and called her softly.

Karen looked up and glanced at him.

Her lips moved as if she wanted to say something, but in the end she only managed an extremely ugly, more desperate laugh than crying.

"Michael," Karen's voice was so soft it seemed a breeze could carry it away, "run."

She didn't say another word, turned around and walked into the elevator door that had just opened.

The elevator doors slowly closed, cutting off her last glimpse of the elevator.