There’s a weird sentence in Dick Fuld’s testimony to the FCIC, which he is slated to give later today on the topic of whether “Too Big To Fail” banks should be propped up by government financing.
The federal government and the individual regulators involved were criticised for using taxpayers’ money to rescue a financial company, which then set another precedent of how “not” to handle the next problem.
… of how “not” to handle the next problem?
Interesting use of quotes there. We think what he means is, don’t make it so obvious next time. Like don’t call it “taxpayer assistance.” Get a good PR company to come up with something better to put between the “”” and the “”” that isn’t “Taxpayer Funded, Troubled Asset Relief Program.”
It’s on the bottom of page 2 of the testimony embedded below. Check it out.
Now that we’ve read the full thing, we think Fuld might have put quotation marks around a few more words in his testimony. Like when he “says,” Lehman invented TARP.
And Lehman came up with all of the plans you later used – to benefit everyone else but us.
From his testimony:
Lehman proposed to government regulators certain measures that could have helped Lehman and bolstered confidence in the financial markets. Including:
- Permitting Lehman to convert to a bank holding company
- Granting Lehman’s Utah bank an exemption under Section 23A of the Federal Reserve Act to raise deposits
- Imposing a ban on naked short selling
Each of those requests was denied at the time. Tellingly, though, each measure was later implemented in some form for other investment banks during the days and weeks following Lehman’s bankruptcy filing.
But he wasn’t so liberal with the quotes in the rest of his testimony, so we’ll summarize what he “said.”
The execs at the top of Lehman Brothers strongly believe that the firm’s failure was a “self-fulfilling prophecy” and that Lehman Brothers “wouldn’t have failed if there had been a ban on naked short selling.” But since the Fed didn’t listen and “all of the other banks ganged up on Lehman,” Lehman “failed.”