Richard Fuld, who pocketed $484 million in compensation between 2000 and 2008 when Lehman Brothers 
collapsed, must be a masochist or a narcissist. Why else would the former Wall Street CEO continue to insist that it was the federal government’s fault that the once venerable Wall Street firm is no more when few believe him?
In testimony before the Financial Crisis Inquiry Commission, Fuld struck a similar tone: “Lehman was the only firm that was mandated by government regulators to file for bankruptcy. The government was then forced to intervene to protect those other firms and the entire financial system.”
Lehman reduced its risks in 2007 and 2008 and the company’s amount and quality of collateral, which the Fed saw as insufficient, was never criticized by regulators, he said.
What Fuld did not point out was that Lehman got into this mess by making gargantuan bets on subprime mortgages. In fact, at the time of the biggest underwriter of mortgage-backed securities at the top of the market. Unlike AIG (NYSE: AIG), which did receive a $182.3 billion government loan, Lehman Brothers lacked the collateral to cover it.
Fuld, who spent his entire 40-year career at Lehman, offered a half-hearted mea culpa.
“I take full and total responsibility for the decisions that I made. I made them with the information available to me at the time. That’s the only way we can ever make decisions,” he said.
Though competitors would have considered it “irrational”, Fuld said the company should have closed its mortgage-backed securities division in 2005 or 2006 instead of in the middle of 2007. Hindsight is 20-20.
Bailing Lehman out would have been a disaster. The government already has more toxic mortgages than it can handle. Imagine what would have happened if it had to take over Lehman’s as well. Taxpayers would have been left holding the bag. Despite protestations by some politicians, the bailouts were largely a success and taxpayers have had their loans paid back with interest.
Fuld now has the time and money to burnish his tarnished legacy.
Jon Berr
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