For MBAs, a Year of InfamyBy Louis Lavelle

An unraveling economy is bound to generate more than its share of failures. But this one has generated an odd sort of culling of the herd. Instead of taking down the low-hanging fruit—executives

with no business training and fewer financial smarts—the current economic crisis has claimed as casualties some highly trained business practitioners

who ought to know better: MBAs.

By almost any measure, it has been a bad year for the MBA brand. The list of B-school alumni who have come under

withering criticism includes those from the worlds of business, government, even academia. The reputations of few top B-schools were left unscathed as the titans of the financial world fell like dominoes: Lehman Brothers' Richard Fuld (NYU,

1973), Merrill Lynch's Stan O'Neal (Harvard, 1978), and Wachovia's Ken

Thompson (Wake Forest, 1975) among them.

It's worth noting that non-MBAs didn't have such a great year either. In fact, Jim Cayne at Bear Stearns, Franklin

Raines at Fannie Mae, and Martin Sullivan at AIG never set foot in a B-school. And while some might think Bernie Madoff had an MBA, with a

concentration in pillaging, he is in fact a poli sci graduate of Hofstra—to the relief of B-school deans everywhere.

What follows is a highly subjective list of failed MBAs. The vast majority

toppled in the past year or so. But the final half-dozen (slides 17-22), which

predate the current crisis, have earned a place in the Hall of Shame by virtue of

their criminal records or the enormity of their misdeeds.

George W. BushFormer U.S. President

MBA: Harvard

A 1975 graduate of Harvard Business School, Bush left a record managing

foreign wars, the federal budget deficit, and the economy that made him the least popular President in modern history. B-

school critic Henry Mintzberg thinks that's no coincidence. He points to the case

study method that has dominated the HBS curriculum for nearly a century, and

suggests that Bush's management style is the result.

"Good managers are decisive, and so good management students must take a stand," Mintzberg writes. "That is the key premise behind the case study method…the student reads a 20-page case one day and declares on the next what the company should do. Refuse to do so with the claim that this is a superficial exercise and you are shown the door. George W. Bush was not shown the door. So it may not be coincidental that his decision making about Iraq has resembled a case study. Certainly no one has accused [Bush] of lacking decisiveness."

Christopher CoxFormer SEC Chief

MBA: Harvard

The chairman of the Securities & Exchange Commission under Bush,

Cox has been criticized for missing the signs that Wall Street was poised for a

meltdown, for his long-standing support of deregulated markets, and for

ignoring multiple warnings about the Bernie Madoff scandal. Cox, like Bush,

is a graduate of Harvard B-School, where the ability of free markets to self-

regulate is, as is in most business schools, an article of faith.

Richard FuldFormer Lehman Brothers CEO

MBA: NYU, Stern School of Business

A 1973 graduate of New York University B-School, Fuld took over

Lehman Brothers when it was spun off from American Express in 1994 and

held the position until Lehman's collapse in 2008. Ignoring warning

signs, Fuld took on outsize risk from subprime mortgages that ultimately

destroyed the company.

Andy HornbyFormer CEO of HBOS

MBA: Harvard

Hornby led HBOS, one of Britain's largest banks, to the brink of

collapse before his resignation in January. The bank, which suffered

massive losses in 2008, was ultimately taken over by Lloyds TSB.

Jeff ImmeltGeneral Electric CEO

MBA: Harvard

Once the golden boy tapped to succeed the legendary Jack Welch, this Harvard graduate has fallen on

hard times. With troubles mounting at General Electric's finance arm, GE's stock has been battered, with $300 billion in market cap disappearing

since late 2007.

Kerry KillingerFormer CEO of Washington Mutual

MBA: Iowa, Tippie School of Business

For 18 years, Killinger led Washington Mutual, building it into a retail banking behemoth. But by last year its shaky

foundations were becoming apparent. With losses from subprime mortgages

mounting, this 1971 Iowa MBA graduate was fired as CEO on Sept. 8. A few weeks later, WaMu was siezed by the FDIC and its assets sold off to

JPMorgan Chase.

Edward LiddyCEO of American International Group

MBA: George Washington University

Liddy, a 1972 MBA graduate of George Washington University, doesn't get the blame for

AIG's near-demise and the collapse of the economic house of cards that followed. (That goes to his predecessors, Martin Sullivan and Hank Greenberg, who don't sport a B-school

credential.) Liddy's flaw: defending a $440,000 corporate retreat for AIG executives at the posh St. Regis Resort in Monarch Beach, Calif., that

took place after the U.S. saved the company from insolvency with $84 billion in loans. To his credit,

Liddy has urged executives who received $165 billion in bonuses to return the cash.

Stan O'NealFormer CEO of Merrill

Lynch

MBA: Harvard

As its CEO for five years, O'Neal transformed Merrill Lynch into an

overleveraged firm awash in toxic assets that was eventually forced into a shotgun

marriage with Bank of America. Under O'Neal, who received his MBA from

Harvard B-School in 1978, Merrill Lynch became one of the biggest underwriters of

mortgage-backed securities on Wall Street. When those bets went sour with

the end of the housing boom, so did O'Neal's career. He called it quits in

October 2007.

Vikram PanditCEO of

Citigroup

MBA: Columbia

Under Pandit's watch since December 2007, heavy exposure to collateralized

debt obligations inherited from his predecessor crippled Citigroup, forcing it to make tens of thousands of job cuts and accept a $25 billion federal bailout.

Since mid-2007, Citigroup lost more than 90% of its market cap. Pandit got his

MBA from Columbia in 1980.

Hank PaulsonFormer Treasury Secretary

MBA: Harvard

As the Bush Administration's point man on the financial crisis since 2006, the

former head of Goldman Sachs pushed through the federal takeover of Fannie Mae and Freddie Mac, and saved AIG from collapse with an $85 billion loan.

But his rescue plan was hopelessly inadequate, and the decision to let

Lehman fail made a bad situation worse. He received his MBA in 1970.

Marion SandlerCo-CEO of Golden West Financial

MBA: NYU, Stern School of Business

With her husband, Herbert, this MBA graduate of New York University B-

School for many years ran Golden West Financial, once the nation's second-

largest savings and loan. Golden West's World Savings Bank pioneered the use of the option ARM mortgage with low teaser rates. The couple sold World Savings to

Wachovia at the peak of the housing boom in 2006, and when many of those loans went south with housing market,

they took Wachovia with it.

Myron ScholesStanford Professor

MBA: Chicago, Booth School of Business

The Nobel Prize winner in economics, who with Fischer Black and Robert Merton created the

Black-Scholes formula for valuing stock options, was a co-founder of Long Term

Capital Management. That hedge fund blew up in 1998 in the wake of the Russian financial

crisis and required a massive bailout by major banks. Since the Black-Scholes formula provides the underpinning for modern

derivative markets, Scholes also has been called the "intellectual godfather" of credit

default swaps, the complex derivative contracts that led to AIG's downfall. Scholes

received an MBA from Chicago in 1964.

John ThainFormer CEO of Merrill Lynch

MBA: Harvard

Merrill Lynch's problems began long before Thain took the helm from predecessor and fellow Harvard grad Stan O'Neal. But Thain certainly didn't help on the PR front. Thain

approved early bonuses of nearly $4 billion to Merrill employees following a $15 billion fourth-

quarter loss and shortly before the firm's distressed sale to Bank of America—it's unclear

if federal bailout funds were used. That, combined with a $1.2 million office renovation that included a $1,400 wastebasket (all costs

subsequently covered by Thain) portray Thain as a tone-deaf leader. Bank of America CEO Ken Lewis gave Thain his walking papers in January.

Ken ThompsonFormer CEO of Wachovia

MBA: Wake Forest, Babcock Graduate School of Management

Thompson, who holds an MBA from Wake Forest, was ousted as CEO of Wachovia last year after the bank reported steep mortgage-related losses. In one sense,

Thompson was not to blame: Many of the losses stemmed from the subprime loan portfolio Wachovia took over as part of the company's $25 billion acquisition of

Golden West Financial in 2006. In another, however, it was: After all, it was

Thompson's deal. After Thompson's departure in July, Wachovia was ultimately sold to Wells Fargo.

Rick WagonerFormer CEO of General Motors

MBA: Harvard

A GM lifer since 1977, the year he received his MBA from Harvard,

Wagoner has been CEO since 2000. On his watch, GM's market share has

slipped from 28% to 18.6%. And, despite the elimination of nearly 70,000 jobs since 2005, the company has been

operating in the red for the past four years—losing $31.5 billion in 2008 alone.

Wagoner failed to restructure GM and change its culture fast enough to

prepare it for the swift downturn of last year that pushed the automaker toward bankruptcy. He killed Oldsmobile, but

also engineered the purchase of Hummer, which hasn't worked out. And he hung on to moribund Swedish brand

Saab past its sell-by date.

At the end, the company was surviving on government loans. With President

Obama threatening to withhold additional cash unless Wagoner left, he

did just that in March.

Andrew FastowFormer Enron CFO

MBA: Northwestern, Kellogg School of Management

Hall of Shame Claim to Fame:

Indicted by a federal grand jury in Texas in 2002 for his role in the Enron collapse, the company's former

CFO was charged with 78 counts including fraud, money laundering, and conspiracy. In 2004, he

pleaded guilty to two counts of wire and securities fraud, agreeing to serve a 10-year prison sentence. In exchange for his cooperation with federal authorities

investigating other former Enron executives, his sentence was reduced to six years. His wife, Lea Weingarten, who served a one-year prison term

following her guilty plea to a misdemeanor tax charge stemming from the Enron scandal, also has an MBA

from Kellogg.

John MeriwetherFounder Long-Term Capital Management

MBA: Chicago, Booth School of Business

Hall of Shame Claim to Fame:

A pioneer in fixed-income arbitrage while at Solomon Brothers in the 1980s, Meriwether founded Long-Term Capital Management in 1994. The hedge fund's collapse four years later, on the heels of the Russian financial crisis, threatened to destabilize the global

economy. The Federal Reserve Bank of New York organized a $3.6 billion bailout by LTCM's

major creditors, avoiding a wider collapse of financial markets.

Michael MilkenFormer "Junk Bond King" at Drexel Burnham Lambert

MBA: Wharton

Hall of Shame Claim to Fame:

In 1989, following a lengthy investigation into Milken's trading activities during the 1980s buyout

boom, a federal grand jury indicted him on 98 counts of racketeering and fraud, including insider

trading, tax evasion, and other charges. The following year, he pleaded guilty to six felonies,

agreed to pay $200 million in fines, and accepted a lifetime ban from the securities industry. He

ultimately served 22 months in prison.

Joseph NacchioFormer CEO of Qwest Communications

MBA: NYU, Stern School of Business

Hall of Shame Claim to Fame:

CEO of Qwest from 1997 to 2002, Nacchio was convicted of 19 counts of insider trading in Qwest stock in 2007. He was ordered to pay more than $70 million in fines and other penalties and was

sentenced to six years in federal prison. An appeals court overturned the conviction in 2008 and ordered a new trial. In addition to his MBA

from New York University, Nacchio has an MS in management from Massachussets Institute of Technology's Sloan School of Management.

Frank QuattroneA former investment banker at Credit Suisse First Boston

MBA: Stanford

Hall of Shame Claim to Fame:

Quattrone was prosecuted for allegedly interfering with the government's probe into the allocation of hot IPOs at Credit Suisse, where he helped take dozens of companies

public during the 1990s tech boom, including Netscape, Cisco, and

Amazon.com. His May 2004 conviction was overturned on appeal. As part of a 2006 deferred prosecution deal, Quattrone will

not be retried.

Jeff SkillingFormer CEO of Enron

MBA: Harvard

Hall of Shame Claim to Fame:

After graduating near the top of his class at Harvard, Skilling went on to work for

McKinsey, where Enron was a client. Hired by Ken Lay in 1990, he became CEO in 2001.

Five years later he was convicted of multiple felony counts in connection with Enron's

financial collapse. He is currently serving a 24-year, 4-month term at a federal prison in

Colorado.