"The big takeaway is that the fate of 20,000 souls was determined in that building, especially on the 31st floor," McDonald, 43, told AFP in an interview ahead of the first anniversary Tuesday of Lehman's collapse.

The 158-year-old Lehman filed for bankruptcy protection on September 15, 2008, in the largest US bankruptcy filing in history, leaving the future of 25,000 staff in jeopardy and sending a financial tsunami across the globe that continues to reverberate today.

But McDonald thinks Lehman, which collapsed under the weight of hundreds of billions of dollars in risky mortgage-backed securities, could have been saved if the bosses would have heeded a number of clear early warnings.

The top Lehman leadership, housed on the bank building's 31st floor, "drove us a 162 miles (261 kilometers) an hour... right into the biggest subprime iceberg ever seen."

Bank chief executive Richard Fuld and president Joe Gregory heard warnings beginning in 2005 that the property market, on which they were "betting the ranch," was on the verge of collapse but turned their backs each time, McDonald charged.

"It was 24,992 people making money and eight guys losing it," said the man who rose from a humble pork chop salesman to top-notch Wall Street trader -- once his team made 250 million dollars in a single day.

Lehman was heavily overleveraged at the top of the market in 2007 -- its net tangible equity was 17 billion dollars but its total investment was 750 billion dollars -- a good chunk of it in mortgage-backed securities that turned "toxic."

"Inside Lehman, some really weird things were going on... the 31st floor was one of those mysterious places on Wall Street because we had incredibly talented risk takers that were politically outmaneuvered and squashed like grapes," said a fuming McDonald.

"They didn't just rule with an iron first, they wore brass knuckles."

Asked if he had personally raised the issue with the top brass, McDonald said he had no access to them, but his immediate bosses had raised the alarm. "It would be complete suicide if I were to go to" the top management, he said.

McDonald is now managing director of Pangea Capital Management and has co-authored a top-selling book, "A Colossal Failure of Common Sense: The Incredible Inside Story of the Collapse of Lehman Brothers."

The book, published in July, squarely points the finger of blame at Fuld and his board, accusing them of taking dangerous risks in pursuit of short-term profits.

"I spoke to 150 people, 45 managing directors, members of the risk committee who were my best friends, and members of the executive committee. This is incredible access," he said.

Fuld was so perturbed about McDonald's book that he angrily phoned a pair of former Lehman traders he believed secretly had helped to contribute to the account of the bank's stunning collapse, the New York Post reported last week.

The former chief executive said he felt "horrible" over the bank's demise when he testified to the US Congress in October 2008, one month after the bank's collapse, to explain the events leading to the disaster.

"What has happened is an absolute tragedy," Fuld said. "I take full responsibility for the decisions I made and for the actions I took."

Fuld also told lawmakers that if he could turn back the clock, he would do many things differently but lawmakers took turns to castigate him.

One of them held up a chart suggesting that Fuld's personal remuneration totaled 480 million dollars over eight years but Fuld said the figure was exaggerated and that the majority of the compensation came in stock, most of which had not been paid to him at the point of Lehman's bankruptcy.

McDonald said the lessons from Lehman's collapse were important -- "not just to warn of such disasters in the future but ultimately to provide a beacon to help us serve Main Street better."

earlier related report
Asia's finance houses leading jobs market recovery: analysts
Financial institutions are leading a recovery in the Asian jobs market as the region emerges from recession more forcefully than expected, analysts say.

While overall unemployment is still rising a year after the collapse of investment bank Lehman Brothers, economists say it is the finance sector which is bucking the trend.

"I'd be as bullish as to say we are in a recovery," said Mike Game, the CEO of Hong Kong-based recruitment firm Hudson's Asia operation.

"We have seen quite a marked turnaround in activity in China in particular. We are also seeing strength in Singapore."

Lehman Brothers filed for bankruptcy protection on September 15, 2008, as it buckled under the weight of the collapse in US sub-prime mortgages, in a scandal that became emblematic of the worldwide financial crisis.

"What happened during the downturn was that a lot of firms couldn't be seen to not lay people off but a lot were reluctant to let people go," said Matthew Hoyle, founder of Matthew Hoyle Financial Markets, a specialist headhunter for the banking and hedge fund industries, based in Hong Kong.

"Now those birds are coming home to roost and there has been a complete reversal in the hiring market. We are now seeing people who were laid off coming back and demanding signing-on fees."

Hoyle said business had tripled since the height of the downturn, adding: "It wasn't entirely unexpected but I couldn't have imagined in my wildest dreams it would be this intense."

Official government statistics in Hong Kong back up Hoyle's optimism.

Although the latest available finance sector employment figures show a 0.6 percent drop in the first quarter of 2009 from the same period a year earlier, they are up on the last quarter of 2008 by 0.4 percent -- equivalent to nearly 700 jobs.

Analysts say the financial institutions stopped hiring altogether in the final three months of last year, before beginning to replace key positions at the start of this year and then taking on staff to meet growing demand in the second quarter.

One trader of a blue chip financial institution in Hong Kong, who asked not to be named, told AFP he had managed to find work with a new firm after being made redundant in the downturn.

"Even though I've been in my new job for about three months, I had two headhunters call up out of the blue in the last two days with multiple roles for derivatives traders at bulge bracket US banks," he said.

"And a number of other jobs on the go are typically smaller banks and brokerages, picking their moment to get into markets they had previously missed the bus on and lift some modestly priced experience to set up new operations."

HSBC is recruiting more than 100 staff members in Hong Kong, The New York Times reported at the start of September, while in mainland China it plans to add 1,000 employees this year, and a similar number next year.

Most of the jobs that are coming back are replacements of previously cut positions, not new jobs, market experts say. But Ian Strutton, director of Manpower Professional Hong Kong, said 20 percent were new positions.

"Generally it is accepted that when a recession comes it is the financial services that are first to react and cut investment, and when the economy starts to recover they are the first to start reinvesting, and they do it quickly," he said.

A recent survey of 815 Hong Kong employers published by recruitment agency Manpower showed that there were marginally more finance sector companies planning to increase staff in the fourth quarter than there were firms planning more downsizing.

"We see an emerging demand from corporate banking, showing a gradual improvement in job opportunities, especially wealth management," said Lancy Chui, general manager of Manpower Hong Kong and Macau.

In China, one recruitment company said the outlook for the Chinese financial services sector was positive as the world's third largest economy was recovering and investor confidence had improved.

Demand for people with finance industry experience had increased in the past two months, Thomas Zhou, partner at Dacare Consulting in Beijing, told AFP.

"Market sentiment in China has picked up since the stock market started to go up. There's been a lot of (recruitment) activity," Zhou said.

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