Fuld plays the blame game as he is grilled by Congressmen
Bloomberg 7 October 2008
WASHINGTON: Mr Richard Fuld blamed the news media. He blamed the short-sellers. He blamed the government, as well as what he characterised as an ‘extraordinary run on the bank’.
But the disgraced head of Lehman Brothers, the bankrupt remnant of a once-great investment house, never really blamed himself.
Instead, in his first public appearance since Lehman’s collapse on Sept 10, Mr Fuld, 62, said in sworn testimony before a congressional panel on Monday that while he took full responsibility for the debacle, he believed all his decisions ‘were both prudent and appropriate’ given the information he had at the time.
That stance did not sit well with angry members of the House Committee on Oversight and Government Reform, who peppered him with hostile questions about the hundreds of millions he made over the last eight years.
Committee members also hammered the Lehman chief executive for what they described as rosy public statements about the bank’s health that did not reflect a scramble for cash behind the scenes.
‘People want to know if you defrauded investors,’ said Representative John Mica, who also told Mr Fuld at one point that he needed to understand his role as the designated ‘villain’ of the day.
Mr Fuld and other Lehman executives are facing preliminary inquiries by federal prosecutors into whether public statements about the bank’s position amounted to fraud.
California Democrat Henry Waxman, who heads the panel, asked if it was ‘fair’ that he had collected US$484.8 million (S$710.5 million) since 2000.
‘That is almost half a billion dollars and that is difficult to comprehend for a lot of people,’ Mr Waxman said. ‘Your company is now bankrupt, our economy is in a state of crisis, but you get to keep US$480 million. I have a basic question. Is this fair?’
Mr Fuld replied that the figure was probably closer to US$250 million, and came mostly in Lehman stock, which is now worthless. ‘The vast majority of stock I got, I still own,’ he said, noting that he is probably among the firm’s biggest shareholders.
‘I don’t expect you to feel sorry for me,’ he told the committee. ‘I got no severance, I got no golden parachute, I got no contract. I never asked for a contract. I never sold my shares. I had eight million of them. I believed in this company.’
Mr Waxman cited another document showing Lehman recommending to its compensation committee four days before the bankruptcy filing that three departing executives receive more than US$20 million in ‘special payments’.
‘In other words, even as Mr Fuld was pleading with Secretary Paulson for a federal rescue, Lehman continued to squander millions on executive compensation.’
Mr Waxman also ticked off some of Mr Fuld’s other personal assets - including an art collection ‘filled with million-dollar paintings’.
‘It seems that the system worked for you, but it didn’t seem to work for the rest of the country and the taxpayers who now have to pay up to US$700 billion to bailout our economy,’ he said.
Mr Fuld said he had more of a stake than anybody.
Describing himself as a ‘Lehman lifer’ who joined the bank 42 years ago and had never worked anywhere else, he said he was haunted by the collapse.
‘I wake up every single night wondering what I could have done differently,’ he said. ‘This is a pain that will stay with me the rest of my life.’
Mr Fuld, by turns combative and contemplative, and often pained by interruptions of his answers, repeatedly denied that any misrepresentations took place.
He said that Lehman might have survived had the US Federal Reserve moved faster to help investment banks borrow from the Fed. He also noted that Goldman Sachs and Morgan Stanley were allowed to transform themselves quickly into bank holding companies after Lehman’s collapse. Lehman had tried a similar move months earlier without success.
Asked why the US government decided to rescue insurer American International Group from collapse, and not save Lehman, Mr Fuld replied: ‘Until the day they put me in the ground, I will wonder.’
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US$480m? No, I Earned Only US$250m
Fuld plays the blame game as he is grilled by Congressmen
Bloomberg
7 October 2008
WASHINGTON: Mr Richard Fuld blamed the news media. He blamed the short-sellers. He blamed the government, as well as what he characterised as an ‘extraordinary run on the bank’.
But the disgraced head of Lehman Brothers, the bankrupt remnant of a once-great investment house, never really blamed himself.
Instead, in his first public appearance since Lehman’s collapse on Sept 10, Mr Fuld, 62, said in sworn testimony before a congressional panel on Monday that while he took full responsibility for the debacle, he believed all his decisions ‘were both prudent and appropriate’ given the information he had at the time.
That stance did not sit well with angry members of the House Committee on Oversight and Government Reform, who peppered him with hostile questions about the hundreds of millions he made over the last eight years.
Committee members also hammered the Lehman chief executive for what they described as rosy public statements about the bank’s health that did not reflect a scramble for cash behind the scenes.
‘People want to know if you defrauded investors,’ said Representative John Mica, who also told Mr Fuld at one point that he needed to understand his role as the designated ‘villain’ of the day.
Mr Fuld and other Lehman executives are facing preliminary inquiries by federal prosecutors into whether public statements about the bank’s position amounted to fraud.
California Democrat Henry Waxman, who heads the panel, asked if it was ‘fair’ that he had collected US$484.8 million (S$710.5 million) since 2000.
‘That is almost half a billion dollars and that is difficult to comprehend for a lot of people,’ Mr Waxman said. ‘Your company is now bankrupt, our economy is in a state of crisis, but you get to keep US$480 million. I have a basic question. Is this fair?’
Mr Fuld replied that the figure was probably closer to US$250 million, and came mostly in Lehman stock, which is now worthless. ‘The vast majority of stock I got, I still own,’ he said, noting that he is probably among the firm’s biggest shareholders.
‘I don’t expect you to feel sorry for me,’ he told the committee. ‘I got no severance, I got no golden parachute, I got no contract. I never asked for a contract. I never sold my shares. I had eight million of them. I believed in this company.’
Mr Waxman cited another document showing Lehman recommending to its compensation committee four days before the bankruptcy filing that three departing executives receive more than US$20 million in ‘special payments’.
‘In other words, even as Mr Fuld was pleading with Secretary Paulson for a federal rescue, Lehman continued to squander millions on executive compensation.’
Mr Waxman also ticked off some of Mr Fuld’s other personal assets - including an art collection ‘filled with million-dollar paintings’.
‘It seems that the system worked for you, but it didn’t seem to work for the rest of the country and the taxpayers who now have to pay up to US$700 billion to bailout our economy,’ he said.
Mr Fuld said he had more of a stake than anybody.
Describing himself as a ‘Lehman lifer’ who joined the bank 42 years ago and had never worked anywhere else, he said he was haunted by the collapse.
‘I wake up every single night wondering what I could have done differently,’ he said. ‘This is a pain that will stay with me the rest of my life.’
Mr Fuld, by turns combative and contemplative, and often pained by interruptions of his answers, repeatedly denied that any misrepresentations took place.
He said that Lehman might have survived had the US Federal Reserve moved faster to help investment banks borrow from the Fed. He also noted that Goldman Sachs and Morgan Stanley were allowed to transform themselves quickly into bank holding companies after Lehman’s collapse. Lehman had tried a similar move months earlier without success.
Asked why the US government decided to rescue insurer American International Group from collapse, and not save Lehman, Mr Fuld replied: ‘Until the day they put me in the ground, I will wonder.’
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