Updated: 2008-10-08 08:15
Richard Fuld, the disgraced head of Lehman Brothers, said he would wonder "until they put me in the ground" why the US government did not rescue the 158-year-old Wall Street firm and claimed regulators knew the full scale of its condition far before its collapse.
Fuld said he took full responsibility for his actions ahead of the downfall of Lehman, but said US regulators were aware of everything at the firm and knew how it was pricing its distressed assets in the months prior to its bankruptcy.
Despite his acceptance of his role before the collapse, US lawmakers expressed outrage to Fuld about Lehman on Monday, saying that Fuld, board members, regulators and Congress all shared blame for its downfall.
"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," Fuld told a congressional panel. "I feel horrible about what has happened to the company and its effects on so many."
Fuld said he did not know why the US government chose to help other financial companies, but not Lehman as it hurtled toward disaster.
Several lawmakers asked why the government stepped in to help insurance company American International Group AIG.
"Until the day they put me in the ground I will wonder," Fuld said in his first public comments since Lehman filed for bankruptcy protection. "I do not know why we were the only one" that was not rescued.
One day after Lehman filed for bankruptcy protection, US authorities stepped in to rescue AIG with a plan to lend the insurer up to $85 billion.
Fuld said Lehman took steps to reduce its leverage as market conditions worsened and by Sept 10 it had reduced its balance sheet by close to $200 billion. Federal prosecutors in New York are looking into whether Lehman executives misled investors by making upbeat comments during a conference call that day, the Wall Street Journal reported on Monday, and lawmakers grilled Fuld on those comments. Five days later, Lehman filed for Chapter 11 bankruptcy protection, leaving three major investment banks. Since then, Merrill Lynch & Co agreed to be taken over by Bank of America Corp, and Goldman Sachs Group Inc and Morgan Stanley said they would become commercial banks.
The US Securities and Exchange Commission loosely supervised the five largest investment banks, including Bear Stearns, for capital and liquidity levels. However, that supervision was voluntary, and the SEC ended that program given that those banks have either collapsed or reorganized. In several hours of testimony before Congress, Fuld spoke methodically and at times seemed to preach financial intricacies to lawmakers, losing patience several times with members who pressed him for precise answers.
Fuld said that throughout 2008, the SEC and the Federal Reserve "actively conducted regular, and at times daily oversight of both our business and balance sheet."
Agencies
(China Daily 10/08/2008 page17)
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