The Lehman collapse: James Bateson's view

September 15 is my wedding anniversary. I usually spend it with my wife. We have a good meal and a bottle of red. This arrangement had worked well for 18 years until September 15, 2008.

My overwhelming recollection of those events is one of shock. That summer, I recall a sense that the worst of the sub-prime crisis was over - we were a year on from Northern Rock and there had been little disruption in the market since the takeover of Bear Stearns some six months previously. Deal flow, for me at least, remained strong. But towards the end of the summer more worrying signs were emerging, with the bailout of Fanny Mae and Freddie Mac.

In truth, I was more greatly affected by the bailout of AIG by the Fed than I was by the collapse of Lehman, but both were seismic events in the history of financial services. As I watched the AIG share price tank that day, I thought of my many friends in that organisation around the world and how they must have been feeling. It was a little reminiscent of 9/11 - in its own way just as shocking, but with less of the graphic images and with a different type and scale of human cost.

In the immediate aftermath of Lehman’s collapse, it did seem as though we were almost on an emergency footing. Almost immediately, we set up a credit crisis steering committee, which I chaired. I can remember my partnersDean Naumowicz and Mike Godden establishing a command post to deal with the many immediate and complex concerns arising out of the close
out of derivative positions with Lehman and AIG counterparties. For them this was truly the practice of law at the sharp end, with the advice being acted on immediately by traders in the dealing rooms, often before there was time to hang up on the call.

The subsequent 12 months have seen a constant stream of urgent, novel and complex issues and although since Christmas we seem to have entered a more thoughtful and measured phase there is a nagging concern that we are not yet out of the woods and that we may yet see more drama.

As I am writing this, it is again my wedding anniversary. We shall be spending it as usual at a nice restaurant with a good red. An outwards semblance of normality for me, perhaps, in a world that has changed, maybe forever.