You're the villain, pols tell former CEO of Lehman Brothers
BY HELEN KENNEDY
DAILY NEWS STAFF WRITER
Updated Tuesday, October 7th 2008, 1:34 AM
Angry lawmakers dragged a Wall Street fat cat before Congress Monday to explain how he walked off with $500 million after bankrupting his company and sparking a global financial panic.
In the hot seat was Richard Broger Fuld, who was CEO of Lehman Brothers, the investment bank that collapsed Sept. 15, prompting a slide that ultimately saddled taxpayers with a $700 billion Wall Street bailout.
He portrayed himself as a victim.
Awww....
Lawmakers painted him as the face of greed.
"Your company is now bankrupt and our country is in a state of crisis - but you get to keep $480 million," said Rep. Henry Waxman (D-Calif.), the chairman of the House Oversight and Government Reform Committee, who grilled Fuld mercilessly as the stock market plunged to new lows in New York.
"I have a very basic question for you: Is that fair?"
Fuld, 62, took off his glasses. He squirmed and looked away. After a pause, he muttered something about stock options.
Waxman interrupted.
He listed some highlights of Fuld's lavish lifestyle that include a $21 million Park Ave. flat, a $14million oceanfront Florida estate, various vacation homes and a multimillion-dollar art collection.
"Is that fair for the CEO of a company that is now bankrupt to have made that kind of money? It's just unimaginable to so many people," Waxman said.
Fuld struggled.
"I would say to you the 500 number is not accurate. I believe the amount that I took out of the company is a little bit over $250 million," he said.
Fuld, whose undertaker's face never betrayed emotion in the two-hour hearing, said a lot of his bonuses were in stock and he was left holding 10 million worthless shares when the firm failed.
"I was probably the single largest individual shareholder," Fuld said.
"I don't expect you to feel sorry for me."
No fear of that.
"If you haven't discovered your role, you're the villain," Rep. John Mica (R-Fla.) told him.
When the 158-year-old firm went down, thousands of shareholders were wiped out. Lehman employees alone lost $10 billion.
CNBC reported Monday that on Sept. 21 - the Sunday after Lehman went bankrupt - Fuld was on a gym treadmill when a weightlifter walked over and knocked him out cold.
After his testimony Monday, some said they'd like to do the same.
In Washington, Fuld insisted Lehman never misrepresented its finances and said the Securities and Exchange Commission monitored the firm closely.
"They were privy to everything as it was happening," he said.
He blamed the bankruptcy on poor regulation, short sellers and a "financial tsunami" that engulfed Lehman.
"I take full responsibility for the decisions that I made," he said. "What could I have done? I have searched myself every single night. This is a pain that will stay with me the rest of my life."
Waxman wasn't terribly sympathetic. "You don't seem to acknowledge that you did anything wrong," he sniffed.
Perhaps the most shocking moment of the hearing came when Waxman unveiled an e-mail in which a top Lehman executive declared himself "embarrassed" about huge bonuses - not by their size, but by a proposal to cut them.
When some lower-level executives sent a memo in June suggesting that "top management should forgo bonuses this year," George Walker - Lehman's global head of investment management and a cousin of President Bush - sent a remarkable e-mail to Lehman's executive committee.
"Sorry team. I'm not sure what's in the water at 605 Third Ave. today," Walker wrote. "I'm embarrassed and I apologize."
Waxman also presented an internal Lehman document showing that on Sept. 11, four days before it went bankrupt, the bank's compensation committee recommended giving three departing executives more than $20 million in golden parachutes.
"In other words, even as Mr. Fuld was pleading for a federal rescue, Lehman continued to squander millions on executive compensation," Waxman told the committee.
Rep. Elijah Cummings (D-Md.) said, "I don't know how he sleeps at night."
Very comfortable.
hkennedy@nydailynews.com
BY HELEN KENNEDY
DAILY NEWS STAFF WRITER
Updated Tuesday, October 7th 2008, 1:34 AM
Angry lawmakers dragged a Wall Street fat cat before Congress Monday to explain how he walked off with $500 million after bankrupting his company and sparking a global financial panic.
In the hot seat was Richard Broger Fuld, who was CEO of Lehman Brothers, the investment bank that collapsed Sept. 15, prompting a slide that ultimately saddled taxpayers with a $700 billion Wall Street bailout.
He portrayed himself as a victim.
Awww....
Lawmakers painted him as the face of greed.
"Your company is now bankrupt and our country is in a state of crisis - but you get to keep $480 million," said Rep. Henry Waxman (D-Calif.), the chairman of the House Oversight and Government Reform Committee, who grilled Fuld mercilessly as the stock market plunged to new lows in New York.
"I have a very basic question for you: Is that fair?"
Fuld, 62, took off his glasses. He squirmed and looked away. After a pause, he muttered something about stock options.
Waxman interrupted.
He listed some highlights of Fuld's lavish lifestyle that include a $21 million Park Ave. flat, a $14million oceanfront Florida estate, various vacation homes and a multimillion-dollar art collection.
"Is that fair for the CEO of a company that is now bankrupt to have made that kind of money? It's just unimaginable to so many people," Waxman said.
Fuld struggled.
"I would say to you the 500 number is not accurate. I believe the amount that I took out of the company is a little bit over $250 million," he said.
Fuld, whose undertaker's face never betrayed emotion in the two-hour hearing, said a lot of his bonuses were in stock and he was left holding 10 million worthless shares when the firm failed.
"I was probably the single largest individual shareholder," Fuld said.
"I don't expect you to feel sorry for me."
No fear of that.
"If you haven't discovered your role, you're the villain," Rep. John Mica (R-Fla.) told him.
When the 158-year-old firm went down, thousands of shareholders were wiped out. Lehman employees alone lost $10 billion.
CNBC reported Monday that on Sept. 21 - the Sunday after Lehman went bankrupt - Fuld was on a gym treadmill when a weightlifter walked over and knocked him out cold.
After his testimony Monday, some said they'd like to do the same.In Washington, Fuld insisted Lehman never misrepresented its finances and said the Securities and Exchange Commission monitored the firm closely.
"They were privy to everything as it was happening," he said.
He blamed the bankruptcy on poor regulation, short sellers and a "financial tsunami" that engulfed Lehman.
"I take full responsibility for the decisions that I made," he said. "What could I have done? I have searched myself every single night. This is a pain that will stay with me the rest of my life."
Waxman wasn't terribly sympathetic. "You don't seem to acknowledge that you did anything wrong," he sniffed.
Perhaps the most shocking moment of the hearing came when Waxman unveiled an e-mail in which a top Lehman executive declared himself "embarrassed" about huge bonuses - not by their size, but by a proposal to cut them.
When some lower-level executives sent a memo in June suggesting that "top management should forgo bonuses this year," George Walker - Lehman's global head of investment management and a cousin of President Bush - sent a remarkable e-mail to Lehman's executive committee.
"Sorry team. I'm not sure what's in the water at 605 Third Ave. today," Walker wrote. "I'm embarrassed and I apologize."
Waxman also presented an internal Lehman document showing that on Sept. 11, four days before it went bankrupt, the bank's compensation committee recommended giving three departing executives more than $20 million in golden parachutes.
"In other words, even as Mr. Fuld was pleading for a federal rescue, Lehman continued to squander millions on executive compensation," Waxman told the committee.
Rep. Elijah Cummings (D-Md.) said, "I don't know how he sleeps at night."
Very comfortable.
hkennedy@nydailynews.com
