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Lehman's Fuld roasted at House hearing

By Aaron Siegel

October 6, 2008 3:45 pm ET

Richard Fuld Jr., chairman and chief executive of Lehman Brothers Holdings Inc., today told the House Committee on Oversight and Government Reform that his company had fallen victim to a "lack of confidence" and a "storm of fear" that had enveloped the financial services industry.

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In his testimony, he blamed the financial services behemoth's Sept. 15 filing for bankruptcy protection on a "litany of destabilizing factors," including "rumors, widening credit default swap spreads, naked short attacks, credit agency downgrades, a loss of confidence by clients and counterparties."

Calling the company's collapse an "absolute tragedy," Mr. Fuld said the investment bank had fallen victim of a "financial tsunami" that is "much bigger than any one firm or industry."

However, committee Chairman Henry Waxman, D-Calif., was unsympathetic, calling Lehman a company where there was "no accountability for failure."

He added that Mr. Fuld took "no responsibility for the collapse of Lehman.”

Mr. Waxman also took Mr. Fuld to task for his generous compensation over the past several years and for paying out more than $30 billion in bonuses to Lehman employees between 2004 and 2007 while steering the company and the economy "towards a precipice."

Citing what he called a "remarkable document," Mr. Waxman castigated Lehman's compensation committee for recommending that the company give three board members $20 million in "special payments" Sept. 11, four days before the company filed for bankruptcy protection.

"In other words, even as Mr. Fuld was pleading with [Treasury] Secretary [Henry] Paulson for a federal rescue, Lehman continued to squander millions on executive compensation,” Mr. Waxman said.

Other congressmen were equally incensed.

Rep. John Mica, R-Fla., said he is asking for a special counsel to investigate Lehman's collapse.

"I wonder how [Fuld] sleeps at night," said Rep. Elijah Cummings, D-Md.

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