The Gorilla in the Hearing Room
Lehman Brothers' Richard "The Gorilla" Fuld told a congressional panel that his firm was the victim of a "crisis of confidence." But was it the CEO's overconfidence that doomed the investment bank?
Though Waxman lived up to his populist firebrand reputation, it was a subdued and (to an extent) contrite Fuld who testified before the House Committee on Oversight and Government Reform—not the aggressive executive who once brawled with another parent at his son's hockey game. "I want to be very clear I take full responsibility for the decisions that I made and for the actions that I took," Fuld began. "Based on the information I had at the time I believe that these decisions were both prudent and appropriate. With the benefit of hindsight, would I have done things differently? Yes, I would have. I feel horrible about what's happened to the company and its effects on so many."
But even while assuming responsibility, Fuld cast his firm—and by extension himself—as the victim of a "tsunami" of unprecedented market forces, uncooperative regulators, rampant "false rumors, and, ultimately, a crisis of confidence.
"We did everything we could to protect the firm," Fuld told the committee in prepared remarks. "We raised capital. We made changes to our senior management team and reduced expenses. We sought strategic investors for a sale of all or part of the firm. We called on regulators to clamp down on abusive short selling practices." He added, "In the end, despite all of our efforts, we were overwhelmed."
Waxman, though, wasn't having any of this. Convening the first of five scheduled hearings on the financial industry meltdown, he painted the 158-year-old investment bank and its CEO as the perpetrators, not victims, of the market volatility. "While Mr. Fuld and other Lehman executives were getting rich, they were steering Lehman Brothers and our economy towards a precipice," Waxman said, adding that the firm's collapse may have "triggered the credit freeze that is choking our economy" and led to the $700 billion bailout package approved by Congress last week. Lehman Brothers, he said, was "a company in which there was no accountability for failure."
Underscoring his point are a number of internal Lehman documents that the firm handed over to the committee, which in turn provided them to the press. One of them is a June 3, 2008, email from executives at Neuberger Berman, Lehman's money management subsidiary, recommending that "top management should forgo bonuses this year. This would serve a dual purpose. Firstly, it would represent a significant expense reduction. Secondly, when the 'world' discovers this in next year's proxy, it would send a strong message to both employees and investors that management is not shirking accountability for recent performance."
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If Fuld takes full responsibility, that should mean his day in court followed by his personal wealth. I can only hope he brings down a few of his congressional cronies with him.
I saw Fuld on TV saying he couldn't sleep at night wondering what he might have said or done that would have prevented this collapse. How about saying the truth and doing what was needed to avert or forestall this crisis? How about returning the millions of dollars you've received from trusting investors? Sorry, I don't feel compassion for you, Mr. Fuld
The blame game is how criminals are caught and punished.
Look back.
Place blame.
FREE AMERICA
REVOLUTIONARY (DIRECT) DEMOCRACY
Does Schlee realize that a Direct Democracy is but an organized mob? It is the antithesis of the Constitution. It is why there IS an Electoral College in the U.S. Somebody tell me he knows this factoid.
Send him to Golf Prison where politicians go to be incarcerated. Better yet, let him go hunting with Big Dick Cheney.
RE:Jimmy
"Does Schlee realize that a Direct Democracy is but an organized mob? It is the antithesis of the Constitution. It is why there IS an Electoral College in the U.S."
The Electoral College was conceived to placate the members of the Continental Congress who came from low voter 'colonies',not necessarily low population, as the number of people in the colonies who were kept in bondage and could not vote was 20:1 or higher. These were people of all colors,not just Africans, and in Colonial times mostly Irish,Scots,and poor English tradesmen and farmers. Citizenry and voting was reserved for the landed gentry who would have been very minor Peerage if they had stayed in England. When the land ownership requirement for voting was lessened, in an attempt to create a false sense of solidarity with the ruling elites against Africans, Native Americans, and incoming European immigrant populations who were perceived as a potential and real political(economic) threat. The creation of an overriding agency that could countermand the popular vote(Mob Rule) guaranteed that the propertied interests that controlled pre-Revolutionary America would continue to control the destiny of the country. The Electoral College, arguably our most anti-democratic institution, was a political ploy added-in to placate the vested interests of Colonial America and ensure the ratification of the Constitution (a pretty radical document in it's day). It is the ethical outlook and practice of a society,reflected in it's laws that limit the power and authority of the state, that prevents popular consent from overriding the lawful prerogatives of the individual.
Please...the collective intelligentsia of these posts only serves to boost your own egos. It is less than overwhelming. The statement still stands, the U.S is not a direct democracy. It is considered a representative republic, or a constitutional republic, one might even call it a liberal democracy. The forefathers of this country knew with implicit confidence there would be those among us who decided they knew best, hence the Electoral College IS in the best interest of the U.S. If you want direct democracy, demand a constitutional convention.
Sounds like some chose to to take alternative U.S. History.
Greed and excess is the norm with these miscreants. Not much affects these high-rollers, despite their faux humility.
For a kick, spend a few moments on the 'net and you can watch a chart with the thousands of private jets that fly each and every day, carrying folks able to pay very large amounts of money to stay supreme.
The rich see themselves as royalty, with the quirks that plague the inbred, and too many want-to-be's sell their souls to facilitate this.
If he could claim so much money for those billions in profit, then may be their accounting is suspect and also if the profits were real what did the company do with those funds?
prosecute, convict, and incarcerate
I go with radline9 except that 'fine' should be added.
Throughout these "failed" companies we're bailing out, many people have been paid fantastic sums to run these companies into insolvency. Fine each and every one into impoverishment to help pay for the bailout as you're sending them to jail in general population. Teach these criminals that if you commit crimes, and do not mistake, they have committed crimes, you will pay to the full extent just like everyone else. Crimes against every human being on the planet.
Like this will happen.
how can I get Mother JOnes at reasonable cost in the UK?
I dont know if the story is true, but Fuld was in the gym on a treadmill. Some one was lifting weights in the corner and walked up to Fuld and punched him, he was out cold after that.
Victim my arse. How dare they lay claim to being a victim with all of the golden parachutes and CEO salaries fit for a king.
Fuld and all the other like him took risks in order to make money for their corp. which is what they were paid to do. Waxman and the other Dems act like he was a crook and just out to ruin the company.
When corporations call the shots for the rest of us ie the gov't it is called fascism; when a select few benefit from those decisions it is called an oligarchy. What is all this talk about the Constitution?
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