UPDATE: Apparently Dick Fuld is a bit miffed that his firm didn’t receive a bailout, especially when so many other companies were.
AP: Fuld said he did not know why the U.S. 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.N).
“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.
UPDATE: As we type, Dick Fuld is being grilled before the House, who seem to be blaming him and his excessive salary for the current financial meltdown…Here’s just a sampling of what Fuld and Congress have said so far.
Lehman executives understood the seriousness of the firm’s dire financial state but “didn’t act fast enough” to prevent the collapse, Waxman said.
The firm, in the days before it filed for bankruptcy, sought board approval to pay three departing executives more than $20 million, according to Waxman.
“[E]ven as Mr. Fuld was pleading …for a federal rescue, Lehman continued to squander millions on executive compensation,” Waxman said.
“I don’t know how [Fuld] sleeps at night,” added Rep. Elijah Cummings, D-Md., a senior member of the committee.
Oh come on, he said he “feels horrible.” Twice! And maybe he has a machine that simulates the sound of the ocean. Or he uses sleeping pills. Or warm milk. Nonetheless, Fuld’s sleeping habits are not really relevant.
Waxman said “the repercussions” of Lehman’s bankruptcy have been felt across the economy. He said it triggered the recent credit crisis and made the $700 billion bailout enacted Friday necessary…
Fuld “will walk away a wealthy man, having earned over $500 million” but takes no responsibility for the crisis, Waxman said. He quoted Fuld as saying in prepared testimony, “In the end, despite all our efforts, we were overwhelmed.”
Fuld points the finger at a host of other factors that have dogged the finance industry, including “naked short selling, which I believe contributed to both the collapse of Bear Stearns and Lehman Brothers.”…
In testimony, Waxman presented a chart that displayed Fuld’s earnings of about $480 million, just since 2000.
“Your company is now bankrupt, the economy is in a state of crisis, yet you get to bring home $480 million,” said Waxman. “Is this fair, when the CEO of a company that’s bankrupt has made that much money?”
The New York Times adds more:
The first Congressional hearing into the causes of the financial crisis began with a portrayal of Lehman Brothers as a firm run by irresponsible leaders who continued to reward executives and spend billions on stock buybacks and other capital-depleting programs even as internal documents warned about the impending crisis.
“It was a company in which there was no accountability for failure,” the chairman of the House Oversight and Governmental Reform Committee, Henry A. Waxman, said in his opening statement.
One Lehman document among thousands reviewed by the House committee showed that four days before the bank filed for bankruptcy protection, Lehman’s compensation committee was asked to grant $20 million in “special payments” for three executives who were leaving, Mr. Waxman said. An e-mail exchange recommending a delay in bonus payments was apparently brushed aside.
Another document showed that executives were warned in a January 2008 meeting that the company was facing liquidity problems. Yet the firm moved forward with capital outlays, including $5 billion in bonuses, $4 billion in shares and $750,000 in dividend payments between 2007 and the firm’s bankruptcy filing on Sept. 15.
An internal analysis conducted by Lehman found that the company did not move early or fast enough to avert the crisis, and concluded that the firm “lacked discipline” in its financial dealings before it filed for bankruptcy, Mr. Waxman said.
“Mr. Fuld takes no responsibility,” Mr. Waxman said of Lehman’s chief executive, Richard S. Fuld Jr. “Instead he cites a litany of destabilizing factors, that led to the company’s collapse.”
Hey, he just said he takes “full responsibility.”
“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 said referring to Henry M. Paulson Jr., the Treasury secretary.
UPDATE: The guy behind Fuld’s right shoulder is George Sard of Sard Verbinnen, a major banking PR firm, and Sard himself is reportedly a crisis expert.
UPDATE: Fuld speaks! He’s not wearing a barrel but instead a suit, blue tie and glasses. He stuck mostly to his prepared remarks during his testimony, noting that he was a “Lehman lifer” and he “feels horrible” about what happened. Really? Cause you didn’t say the same thing two weeks ago.
He did add that he lost money with everyone else at his bank, pointing out that he owned 10 million shares when Lehman filed for bankruptcy. He also said that he never turned down an offer to buy Lehman Brothers. Furthermore, he stressed that despite all of their efforts, they were simply overwhelmed by market forces as were other banks. And he blamed naked short sellers for much of the bank’s woes.
The Q-and-A portion has just begun.
Meanwhile, the Dow is now down 500+ points.
EARLIER: Dick Fuld is expected to make his first public appearance since Lehman’s downfall today in a televised hearing before the House Oversight Committee to discuss what exactly happened to his bank.
Even though Fuld hasn’t shown up yet, The Times and WSJ are reporting his testimony as if it’s already happened. They must be practicing that whole “report future events” style of journalism that Stephen Colbert advocated. And Fuld’s prepared remarks were already released.
SPOILER ALERT! Here’s what he plans to say.
WSJ: Lehman Brothers Holdings Inc. Chief Executive Richard S. Fuld Jr., in his prepared testimony before a House Government Reform Committee, portrayed Lehman Brothers as mistaken in its assumptions about the health of mortgage markets, but also the victim of happenstance and financial markets that eroded too quickly for Lehman executives to contain the firm’s losses.
Mr. Fuld pointed to repeated pronouncements by Federal Reserve Chairman Ben Bernanke that a downturn in the real estate market would not be precipitous, as well as his own statement at a Lehman Brothers shareholders meeting that the worst of turbulence in the financial markets had already occurred.
“With the benefit of hindsight, I can now say that I and many others were wrong,” Mr. Fuld said in his testimony.
Fuld will apparently also stick to the same talking points he used to address his staff two weeks ago saying that he, still, “feel[s] horrible about what happened.”
Mr. Fuld said that some media coverage of Lehman Brothers was “sensationalized,” and blamed leaks to press about a possible deal with the Korea Development Bank as well as rumours about the company’s liquidity for forcing it to announce its earnings before it had a chance to complete any plans for finalising a deal that would lessen the impact of company’s downward spiral on its investors. “I feel horrible about what happened,” Mr. Fuld said in testimony, pointing to “an extraordinary run on the bank.”
Fuld’s full blame-shifting testimony is below, but he could still go completely off-book and just speak from the heart. (What’s going on in there, Dick…?)
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