Richard S. Fuld Jr. blamed the news media. He blamed the short-sellers. He blamed the government, as well as what he characterized as an “extraordinary run on the bank.”
But the chief executive of Lehman Brothers Holdings, the bankrupt remnant of a once-great investment house, never really blamed himself.
Instead, in his first public appearance since Lehman’s collapse, Fuld said in sworn testimony before a congressional panel on Monday that while he took full responsibility for the debacle, he believed all his decisions “were both prudent and appropriate” given the information he had at the time.
That stance did not sit well with angry members of the House Committee on Oversight and Government Reform, who peppered Fuld with hostile questions about the hundreds of millions he made over the last eight years.
Members of the committee, several of whom mispronounced Fuld’s name as “Fold” or “Food,” also hammered the Lehman chief executive for making what they described as rosy public statements about the bank’s health that did not reflect a scramble for cash behind the scenes.
“People want to know if you defrauded investors,” said Rep. John L. Mica, R-Fla., who also informed Fuld at one point that he needed to understand his role as the designated “villain” of the day.
Describing himself as a “Lehman lifer” who joined the bank 42 years ago and had never worked anywhere else, Fuld said he was haunted by the collapse.
“I wake up every single night wondering what I could have done differently,” he said. “This is a pain that will stay with me the rest of my life.”
Fuld, by turns combative and contemplative, and often pained by interruptions of his answers, repeatedly denied that any misrepresentations took place. Even when confronted with internal documents that seemed to tell a different story, Fuld said he believed until five days before the Sept. 15 bankruptcy filing that Lehman remained in decent health.
“No, sir, we did not mislead our investors,” Fuld said in response to a question from Dennis J. Kucinich, D-Ohio, who wanted to know how Fuld’s public statements could be valid in light of efforts by JPMorgan Chase to secure $5 billion in extra collateral from Lehman in the final days.
“To the best of my ability at the time, given the information I had, we made disclosures that we fully believed were accurate,” Fuld said.
He said that Lehman might have survived had the Federal Reserve moved faster to help investment banks borrow from the Fed. He also noted that Goldman Sachs and Morgan Stanley were allowed to transform themselves quickly into bank holding companies after Lehman’s collapse. Lehman had tried a similar move months earlier without success.
Fuld and other Lehman executives are facing preliminary inquiries by federal prosecutors into whether public statements about the bank’s position amounted to fraud. That might have explained the lawyerly tone Fuld often adopted during two hours of questioning.