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World Bank Taps Lehman's Ex Risk Officer As Treasurer

This article is more than 10 years old.

You'd think being the person who served as chief risk officer at Lehman Brothers in the years leading up to its bankruptcy would be hard pressed to score any financial job ever again.

That's not the case for Madelyn Antoncic who served as the defunct investment bank's chief risk officer between 2002 and 2007 and its Global Head of Market Risk Management before that. The World Bank just hired Antoncic to run its finances as its treasurer and vice president.

She'll be responsible, according to the World Bank, for its Capital Markets Department; Investment Management Department; Pension & Endowments; Quantitative Risk Analytics; Treasury Operations Department; Banking & Debt Management, and Sovereign Investment Partnerships.

Now why on earth would any respectable bank especially one that lends to countries to help build their economies allow a Lehman risk officer to handle its finances?

Lehman, in case your brain has blurred that traumatic memory, collapsed because its executives like Dick Fuld and COO Joe Gregory thought the bank was invincible from any real damage and bet the house accordingly.

Mark Walsh, who ran the firm's real estate operations, was given free reign. And as Andrew Ross Sorkin describes him in Too Big To Fail, Walsh "had virtually unlimited use of Lehman's balance sheet and used it to turn the firm into an all-in, unhedged play on the U.S. real estate market" right up through the time the credit markets froze.

In February 2007, Lehman's head of fixed income made a speech to his team about a train wreck that the U.S. economy was facing and that the next domino to fall would be commercial banks which he predicted would immediately begin deleveraging. Around the same time according to TBTF, Gregory invited the risk-averse head of fixed income to lunch. His words: You have to be more aggressive towards risk. You're holding back and we're missing deals.

A year later Gregory, who helped run the firm into the ground, was removed from his position. (Too late of course.)

So where was Antoncic to reign in such risk during that time? Well, she was being kicked out of executive meetings where risk was being discussed. Antoncic, with her PhD in economics and a prior 12 year stint at Goldman Sachs, might have know Lehman was taking too much risk but her opinion was blatantly disregarded when she was removed from Lehman's executive committee in 2007.

So at first glance, the World Bank's decision to hire the person who was supposed to manage Lehman Brothers' risk as its Treasurer may seem like a bit of joke. But Antoncic was likely the only person on Lehman's executive committee who had any sense.