Lehman sought millions for execs while seeking aid
By JULIE HIRSCHFELD DAVIS
Associated Press
October 7, 2008
Page 2 of 2
The bailout, now law, was so rushed that the usual congressional scrutiny is only coming now, after the fact.
"Although it comes too late to help Lehman Brothers, the so-called bailout program will have to make wrenching choices, picking winners and losers from a shattered and fragile economic landscape," said Rep. Tom Davis of Virginia, the committee's senior Republican.
Fuld said Lehman did everything it could to limit its risks and save itself. It failed, he said, because of a "crisis in confidence" on Wall Street, market manipulation in which investors preyed on distressed financial players by betting on their demise, and would-be buyers who waited for the government to step in to help fund a sale.
"In the end, despite all of our efforts, we were overwhelmed," Fuld said, looking uncomfortable seated by himself at a witness table where he fiddled with a pencil and removed and donned his glasses habitually as he fielded at-times angry questions.
"Do you think it's fair?" Waxman demanded of Fuld as he outlined his exorbitant pay packages and noted that shareholders ended up with nothing.
Fuld said he is haunted nightly wondering what he might have done to avert Lehman's bankruptcy, the largest in U.S. history.
"This is a pain that will stay with me for the rest of my life," he said.
Also haunting him, Fuld said, is the question of why Lehman didn't get a federal rescue while others did: Bear Stearns, the mortgage giants Fannie Mae and Freddie Mac, and insurance giant American International Group Inc.
"Until the day they put me in the ground, I will wonder," Fuld told the committee.
But the committee's investigation painted Fuld as anything but a victim.
Waxman released e-mail correspondence from June 2008 in which Fuld dismissed the suggestion from executives at a Lehman subsidiary that the company's top people forgo bonuses to "send a strong message to both employees and investors that management is not shirking accountability for recent performance."
Fuld wrote, "Don't worry -- they are only people who think about their own pockets."
The suggestion came from executives at Lehman's money management subsidiary, Neuberger Berman, who also were recommending that Lehman spin off its business to insulate its employees -- and their bonuses -- from Lehman's sagging stock price and from "management mistakes."
George H. Walker, President Bush's cousin and a member of Lehman's executive committee, breezily shot down the ideas, according to the e-mails.
"Sorry team. I am not sure what's in the water at" Neuberger Berman, Walker wrote to the rest of the executive committee. "I'm embarrassed and I apologize."
Republicans dismissed the hearing as little more than a political stunt given that it failed to probe the role of Fannie Mae and Freddie Mac -- huge players in the mortgage market -- in the financial meltdown.
"If you haven't discovered your role today, you're the villain, so you have to act like the villain," Rep. John Mica, R-Fla., told Fuld facetiously, earning a tight smile.
In a statement, Rep. John Boehner, R-Ohio, the House minority leader, accused Waxman of refusing to investigate the mortgage giants "solely to shield his fellow Democrats politically," and said it "cheats the American people of key facts that could help all of us learn how we got here -- and what we must do to make certain this situation never repeats itself."
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