Lehman Execs Get Griled on the Hill
Monday, October 06, 2008SUSIE GHARIB: Some market watchers say the decision to let Lehman Brothers fail touched off the stock slide we've seen in recent trading sessions. Congress is investigating Lehman's fall and today grilled CEO Richard Fuld. As Darren Gersh reports, Fuld claims he did not mislead investors in the days before the company filed for bankruptcy.
DARREN GERSH, NIGHTLY BUSINESS REPORT WASHINGTON BUREAU CHIEF: For Lehman Brothers CEO Richard Fuld, the critical moment came on a conference call on September 10th. That was the day he told investors Lehman's assets were properly valued and the firm would not need money from outside investors. Lawmakers like Ohio's Dennis Kucinich weren't buying it.
REP. DENNIS KUCINICH (D), OHIO: Five days later, you filed for bankruptcy. Did you mislead your investors?
GERSH: To questions like that, Fuld insisted Lehman was on a sound financial footing, with capital levels and risk ratios that compared favorably to other Wall Street firms. At the time, the company was also planning to offload assets into a new firm it dubbed "SpinCo."
RICHARD FULD, CEO, LEHMAN BROTHERS: So there was disclosure about where we were, and I believe understanding, and there certainly was no attempt to mislead anyone.
GERSH: Fuld describes himself as haunted by events at Lehman, replaying critical decisions in his head every night. But he blamed Lehman's collapse on a "storm of fear" that was bigger than any one firm. He also says he does not understand why the Federal Reserve and Treasury decided to let his firm fail when it rescued others.
FULD: Until the day they put me in the ground, I will wonder.
GERSH: Henry Waxman, the chairman of the House Committee on Oversight and Government Reform, wondered about a few things, too: like how Fuld could justify earning $350 million in just eight years, and how he could spend billions on employee bonuses and compensation when the firm was heading into a credit crunch.
REP. HENRY WAXMAN (D-CA), CHAIRMAN, OVERSIGHT AND GOVERNMENT REFORM COMMITTEE: In retrospect, you think you should have done some things different, but you don't seem to acknowledge that you did anything wrong.
GERSH: Tomorrow it is AIG's (AIG) turn in the hot seat, when three former CEOs testify about the $85 billion taxpayer bailout of the nation's largest insurance company. Darren Gersh, NIGHTLY BUSINESS REPORT, Washington.
