CenterFuld - Lehman Boss In The Dock
Although calm and in control when reading his statement into the record, Fuld was cautious and appeared at times confused when answering questions from members of the committee. In short, he lost his tongue, often stammering as he tried to respond. Whether this was because is not used to being quizzed in this manner, or simply because he was navigating difficult waters, wanting to be open and honest, but not saying anything that could later be used against him in a court of law, who knows ?
In truth, Fuld lost it in two important areas where actually he could have come back with fairly strong justifications. When asked how he could live with the fact that he raked in almost $500m in the last few years, Fuld was stumped. What he should have said, of course, was that the majority of this compensation came from vesting share options, and that he was only able to exercise these as Lehman's stock was riding high at the time. Many other investors - Lehman staff, institutional investors and ordinary members of the public - would also have reaped significant gains if (as many did) they cashed out when Fuld did. He should also have pointed out more clearly that his own compensation, although substantial from any other viewpoint, was not excessive in Wall Street terms.
Fuld also stammered when asked why he paid so much out to executives and employees, instead of keeping something back for a rainy day. He was less than convincing with his answer, and should simply said that he didn't make the market. Unless Lehman had paid market rate for those professionals, of course, there wouldn't have been anything to put away for that rainy day anyway, as the best staff would have been working elsewhere.
Here are some of the highlights from the testimony:
'The problems that most believed would be contained to the mortgage markets have spread to our credit markets, our banking system, and every other area of our financial system. As incredibly painful as this is for all connected to or affected by Lehman Brothers - this financial tsunami is much bigger than any one firm or industry'.
'We believed we were well-protected to withstand even the most difficult markets. What we have seen recently in the international credit markets has overwhelmed many financial institutions and threatened all financial institutions....We did everything we could to protect the firm'.
'Ultimately what happened to Lehman Brothers was caused by a lack of confidence. This was not a lack of confidence in just Lehman Brothers, but part of what has been called a 'storm of fear' enveloping the entire investment banking field, and our financial institutions generally'.
'I want to be very clear. I take full responsibility for the decisions that I made, and for the actions that I took based on the information that we had at the time. I feel horrible about what has happened to the company and its effects on so many'.
'Until the day they put me in the ground I will wonder why. I don't know why we were the only one (that wasn't bailed out)'.
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Richard Fuld's Statement To The Congressional Committee (In Full)