Congress questions Lehman Brothers CEO

Chairman and CEO of Lehman Brothers Holdings Richard Fuld Jr. said that his company’s fall could have happened to anyone because “nobody expected such decline” in the housing market. Rep. Jim Cooper (D-Tenn.) said that while Fuld claimed this could have happened to any company, “it didn’t happen” to other companies.

Fuld said that Lehman Brothers’s capital was in good shape on September 10, five days before the company filed for bankruptcy. Rep. John Sarbanes (D-Md.) called Fuld’s account of the fall of the company “implausible.”

Fuld said closing the mortgage business of Lehman Brothers down would have been a good idea in retrospect, but others would have considered that “irrational” at the time. Rep. Peter Welch (D-Vt.) said that companies had taken the business of mortgage lending, and “put it on steroids.”

Rep. Chris Van Hollen (D-Md.) said that the previous compensation packages Fuld had accumulated (Fuld said he received about $350 million in compensation while at Lehman Brothers) should be given to the shareholders of the company. Fuld said he suffered financially from his company’s bankruptcy considering he was “the single largest shareholder.”

Fuld said that while he gave the U.S. Securities and Exchange Commission (SEC) high marks, “the overall regulatory system has to be redone.” Rep. Diane Watson (D-Calif.) said that the SEC was either “unable or unwilling” to regulate companies such as Lehman Brothers.