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Last Updated: Oct 9, 2008 - 10:37:59 AM |
Richard S. Fuld Jr. was chief executive officer at Lehman Brothers
Holding when it collapsed.
In the New York Times account of this dramatic economic crash of a 158
year old business investment giant, Fuld, battered by the reality of
his position at the helm of this U.S. business, and formerly highly
respected landmark, had a lot to say at a congressional hearing
according to the New York Times October 7:
"Richard S. Fuld Jr. blamed the news media. He blamed the
short-sellers. He blamed the government as well as what he
characterized an `extraordinary run on the bank.'
"Instead in his first public appearance since Lehman's collapse, Mr.
Fuld said in sworn testimony before a congressional panel on Monday,
that while he took full responsibility for the debacle, he believed
that all his decisions `were both prudent and appropriate' given the
information he had at the time."
But Fuld's explanation of who was to blame for Lehman Brother Holding's
collapse didn't sit well with angry members on the House Committee on
Oversight and Government Reform. As they listened in shock and
disgust, with outrage they quizzed Fuld with hostile questions
regarding the hundreds of millions he made over the last eight years.
John L. Mica, Florida Republican, bluntly demanded, "Mr. Fuld, people
want to know if you defrauded investors."
Obviously, Fuld recognized how he managed to make his millions was the
burning question of the day. Fuld explained quietly that he had joined
Lehman Brothers 42 years ago. He also added that he had never worked
anywhere else, and was haunted by the economic icon's horrendous
collapse.
Obviously, Fuld recognized how he managed to make his millions was the
burning question of the day. Fuld explained quietly that he had joined
Lehman Brothers 42 years ago. He also added that he had never worked
anywhere else, and was haunted by the economic icon's horrendous
collapse.
As he continued explaining, he said he had not misled investors,
claiming he believed until 5 days before the September 15 bankruptcy
filing, that Lehman Brothers Holdings remained in decent health.
According to the New York Times:
"Mr. Fuld and other Lehman executives are facing preliminary inquires
by federal prosecutors into whether public statements about the bank's
position amounted to fraud."
The claim that he was confronted with was a significant piece of
evidence that sharply conflicted with his claim he believed until 5
days before filing bankruptcy on September 15 he thought
Shearson-Lehman was in good health.
A conflicting memo was presented:
"At one point on Monday, Mr. Fuld was confronted with an internal memo
dated June 8 that included warnings about Lehman's condition, and asked
the question 'Why did we allow ourselves to be so exposed?'"
After examining the memo at length, Fuld raised his head and said,
"This document does not look familiar to me."
According to the New York Times:
"Later in the hearing, Mr. Fuld was asked why Lehman approved nearly
$20 million in payments for two departing executives about a week
before the bankruptcy filing. Mr. Fuld said one payment, $2 million
for Andrew J. Morton, the head of fixed-income was 'deemed appropriate
for his years of service.'
"Another $16 million, paid to Benoit Savoret who was leaving as chief
officer for Europe, and the Middle East, was a result of a contractual
obligation."
On the question of what his mistakes were, Mr. Fuld answered after some
thought:
"Mr. Fuld said he wished he had moved more quickly to reduce Lehman's
commercial real estate holdings."
After the five hour televised hearing the congressional members who had
listened to revelations of the huge salaries and bonuses of Lehman
Brothers were outraged. Apparently the deregulation of the banks and
investment corporations had generated situations like Lehman Brothers'
tragic collapse.
The investors who trusted these executives have been betrayed.
The bonuses given to the Shearson executives make a mockery of fair
play and justice.
No matter how far the Dow sinks, TV shows the stock market crew
applauding themselves.
When Shearson Lehman Brothers collapsed, perhaps they should have
applauded themselves for exiting with all those millions and certainly
be grateful for those who voted for bank deregulation, which made their
multi-million dollar getaway possible.
Source:Ocnus.net 2008
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