Dear All,
I am sure many must have seen the live testimony of bankrupt Lehman Brothers Holdings Chief Executive Richard Fuld.
To me it was a fascinating case of Hollywood style politics being played out by respected Congressmen, to give the world an aura of transparency, fairness and generosity of spirit that is supposed to have been one of the founding principles of the White settlers who bought over cheap land from Native Americans in the past few centuries and built up America as a model of tolerance and freedom for the world to adulate and squirm in its own filth, prejudice and intolerance.
Thomas Freidman, author of " Hot, Flat and Crowded "of immigrant forefathers from Russia / Eastern Europe, is a man who jokingly talks of an America with high walls but a very large door and now promotes the necessity of high oil and energy prices for America to return to its founding principles of land of innovation and freedom for all, regardless of colour, creed or background.
------
MarketWatch - http://www.marketwatch.com/news/story/fuld-blames-lehmans-fall-lack/story.aspx?guid={A94914F8-4190-45B8-A850-2C41067F859B}&dist=msr_19
WASHINGTON (MarketWatch) -- Facing skeptical and angry members of Congress, Lehman Brothers Holdings Inc. Chief Executive Richard Fuld blamed the bankruptcy of his firm on a "lack of confidence" Monday, saying in testimony he and other executives did everything they could to protect the investment bank before it imploded in September.
"Ultimately what happened to Lehman Brothers was caused by a lack of confidence," Fuld said. "This was not a lack of confidence in just Lehman Brothers, but part of what has been called a storm of fear enveloping the entire investment-banking field and our financial institutions generally," Fuld said in testimony at a hearing of the House Committee on Oversight and Government Reform. Read Fuld's testimony.
But lawmakers lashed out at Fuld even before he took his seat at the witness table, with one even asking how the executive could sleep at night.
"Mr. Fuld takes no responsibility for the collapse of Lehman," said Rep. Henry Waxman, D-Calif., the panel's chairman, before Fuld began his testimony. Waxman also said that Fuld will come out of the bankruptcy remaining wealthy while the economy is threatened.
"Mr. Fuld will do fine," Waxman added. "But taxpayers are left with a $700 billion bill to rescue Wall Street and an economy in crisis," referring to the $700 billion rescue plan for the financial markets signed into law Friday.
Waxman also said experts believe that Lehman's (LEHMQ fall triggered the credit crisis and made the rescue plan necessary.
Lehman filed for bankruptcy on Sept. 15, the largest bankruptcy filing in U.S. history. The committee is planning five hearings about the financial meltdown.
Testifying before the panel, Fuld said: "I take full responsibility for the decisions that I made and for the actions that I took."
'I wonder how [Fuld] sleeps at night.'
— Rep. Elijah Cummings, D-Md.
In his testimony, Fuld remarked that he believed the company was "well protected to withstand even the most difficult markets."
But he also said that the government could have taken steps to help the troubled bank. An earlier decision by the Federal Reserve to allow banks to pledge collateral to the central bank "would have been extraordinarily helpful to Lehman Brothers," he commented.
Similarly, help from the Fed for a merger between Lehman and another bank could have stemmed more problems in the market, according to Fuld.
Moreover, he said, the Securities and Exchange Commission and the Federal Reserve closely observed the company's business in 2008. "They were privy to everything as it was happening," he asserted. "Quarter to quarter, month to month, regulators saw how we reduced our commercial real-estate holdings, how we increased our liquidity pool, how we decreased leverage and strengthened our capital levels."
But House lawmakers -- all of whom are up for re-election next month -- went on the attack against the embattled executive.
Rep. John Mica, R-Fla., said he's asking for a special counsel to investigate the fall of Lehman, and Rep. Elijah Cummings, D-Md., said members of his church were asking on Sunday why Fuld and other executives were paid so much money.
"I wonder how [Fuld] sleeps at night," Cummings added.
Lehman's board was asked to approve $20 million in special payments to three departing executives just four days before the company filed for bankruptcy, according to Waxman.
Fuld said the company's executives did all they could to prop up the bank but couldn't manage to save it. "In the end, despite all our efforts, we were overwhelmed, others were overwhelmed and still other institutions would have been overwhelmed had the government not stepped in to rescue them."
Meanwhile, House Republican Leader John Boehner said the hearings amount to little more than "political theater" as long as they don't probe the roles of Fannie Mae (FNM in the credit crisis.
"Chairman Waxman has flatly refused numerous requests by Republicans to hold even a single hearing on Fannie Mae and Freddie Mac's role in the financial crisis that is having an impact on families, seniors, small businesses and every single taxpayer in America," Boehner said in a statement.
----
There were also pointed questions put to Mr Fuld whether he felt he was double crossed by the Treasury Secretary H Paulson, and given to put faith in some wrong planted leads and insider information. To this Mr Fuld replied that he sincerely wished this were not the case.
The Guardian has reported on this Congressional hearing under oath, and - for public consumption, inept Congressman, vacuously kept reminding Mr Fuld , no doubt for public consumption, that he was under oath - - Nagarjuna
----
Guardian has reported : http://www.guardian.co.uk/business/2008/oct/06/creditcrunch.lehmanbrothers
It was a showdown to cherish for critics of Wall Street's culture of enrichment. The grim-faced boss of the bankrupt bank Lehman Brothers was left squirming with discomfort today as a veteran Democrat roasted him over his multi-million dollar pay.
With the startled look of a man unaccustomed to sharp examination, Lehman's chief executive, Richard Fuld, clashed bluntly with the chairman of the House oversight committee, Henry Waxman, on Capitol Hill.
Called upon to explain why Lehman collapsed last month, Fuld began with a note of humility, saying he felt "horrible" over the demise of the 158-year-old institution. "I want to be very clear," said Fuld. "I take full responsibility for the decisions I made and for the actions I took."
In a brief speech that was heard in silence, Fuld told lawmakers that if he could turn back the clock, he would do many things differently. As soon as he finished speaking, sparks began to fly. The chairman of the committee held up a chart suggesting that Fuld's personal remuneration totalled $480m over eight years – including payouts of $91m in 2001 and $89m in 2005.
"Your company is now bankrupt and out country is in a state of crisis," said Waxman, a liberal lawmaker from California. "You get to keep $480m. I have a very basic question – is that fair?" After a long pause, Fuld demurred, saying the figure was exaggerated: "The majority of my compensation, sir, came in stock. The vast majority of the stock I got I still owned at the point of our [bankruptcy] filing."
Waxman cut him off, saying that even if the figure was slightly lower, it was "unimaginable" to much of the public. "Is that fair, for a CEO of a company that's now bankrupt, to make that kind of money? It's just unimaginable to so many people." Waxman asked. "I would say to you the $500m number is not accurate," said Fuld. "I'd say to you, although it's still a large number, for the years you're talking about here, my cash compensation was close to $60m, which you've indicated here, and I took out closer to $250m [in shares]."
Interrupting again, Waxman listed Fuld's collection of property – including a $14m ocean-front villa in Florida and a home in the exclusive ski resort of Sun Valley, Idaho. "You and your wife have an art collection filled with million dollar paintings," said Waxman. "Your former president, Joe Gregory used to travel to work in a helicopter."
The pugnacious Waxman warmed to his theme: "You made all this money taking risks with other peoples' money."
Refusing to give ground, Fuld said his pay had been set by an independent compensation committee which spent "a tremendous amount of time" making sure executives' interests were aligned with those of shareholders.
"When the company did well, we did well," said Fuld. "When the company did not do well, we didn't do well." Waxman disagreed: "Mr Fuld, there seems to be a breakdown, because you did very well when the company was doing well and you did well when the company was not doing well. And now your shareholders who owned your company have nothing. They've been wiped out."
Fuld's evidence on Capitol Hill was his first public appearance since Lehman failed, sparking a chain of events that have sent shockwaves through the global financial system and has prompted the US government to begin a $700bn bail-out of the banking industry.
A lifelong Lehman employee who joined the firm as an intern in 1966, Fuld has been blamed for the debacle by many of the bank's 28,000 staff – including those in London who have accused senior management of filleting Lehman's British operation of money in the bank's final days.
Deadpan and emotionless, Fuld repeatedly frustrated congressmen by answering questions with lengthy, technical financial explanations. Frustrated by his demeanour, a Republican congressman, John Mica, tried humour. "If you haven't discovered your role, you're the villain today," said Mica. "You've got to act like a villain."
Fuld stared back wordlessly, without a shadow of a smile. Towards the end of his two hours of evidence, Fuld told Congress that until the final hours of the bank, he believed a takeover by Barclays would save Lehman Brothers from bankruptcy. In the event, Barclays waited until after Lehman had collapsed before buying the remnants of its US operations.
"Not that anyone on this committee cares about this but I wake up every single night wondering 'what could I have done differently?'" Fuld said. "In certain conversations, what should I have said? What could I have done? I have searched myself every single night." Raising his voice, Fuld continued: "This is a pain that will stay with me for the rest of my life."
===
It is amazing that while paid lobbying is perfectly LEGAL in Washington policy making, naked attempts were made to black wash a man as a VILLAIN - a man who was paying salaries to 28,000 of the smartest individuals in the financial world, a man who evolved a highly successful part salary, part bonuses and part stock options compensations system to ensure alignment of employee interests with those of shareholders in the most sophisticated of American financial institutions and was the epitome of a sophisticated art collector in a land where the rights of the wealthy are protected and kept above the rights of the masses -
One Congressman pointed out the amounts of money paid by Lehman Brothers to influence financial regulators and law makers in Capitol Hill, and if Lehman Brothers was actually manipulated and sabotaged from the very top echelons of the US financial / regulatory watchdogs.
But all this was glossed over in the ridiculous circus of arbitrary transparency that US of A tried to put before the world at large.
Now the nationalized banks are here to stay, greed and profit making is suddenly a dirty word, and attempts are being made to redefine globalization and capitalism for the world in a manner more palatable to American voters and Sovereign Funds from Gulf countries, Japan and Emerging Economies.
Long Live America.
How America has turned 180 degrees is clear before all, when one cuts out the postures, and posture making, and histrionics of American politicans and academics.
Regards,
Nagarjuna
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment