Waxman Blasts Former Lehman Brothers CEO During Hearing

Washington, D.C. (AHN) - House Oversight and Government Reform Committee Chairman Henry Waxman (D-CA) opened his panel's hearing on the financial crisis on Monday by accusing former Lehman Brothers CEO Richard Fuld of taking no responsibility whatsoever for the largest bank failure in U.S. history.

Waxman had written Fuld last month asking that he provide communications including e-mail messages transmitted to and from his office, as well as from all of Lehman's board members for the past 180 days. The congressman also asked for "a list of instances in which a CEO or board member exercised stock options or sold company shares."

"Over the weekend, we received the written testimony of Richard Fuld... Mr. Fuld takes no responsibility for the collapse of Lehman," Waxman said on Monday. "Instead, he cites a "litany of destabilizing factors" and says: 'In the end, despite all our efforts, we were overwhelmed.'"

"In preparation for today's hearing, the Committee received thousands of pages of internal documents from Lehman Brothers. Like Mr. Fold's testimony, these documents portray a company in which there was no accountability for failure," Waxman added.

The committee chairman said the documents show that Lehman "saw warning signs" but "did not move early/fast enough" and lacked "discipline about capital allocation," contradicting Fuld's claim that Lehman was overwhelmed by forces outside of its control.

Waxman also cited emails showing officials mocking money managers who advised that top management should forgo bonuses to reduce costs and take responsibility for the company's decline. "Sorry team. I'm not sure what's in the water at 605 Third Avenue today. ... I'm embarrassed and I apologize," a member of Lehman's Executive Committee had said in response.

Fuld, who is set to testify in the hearing later on Monday, had said in response to the advise, "Don't worry - they are only people who think about their own pockets."

Rep. Tom Davis (R-VA), the ranking Republican in the panel, called on Waxman to take a less partisan approach in the hearing, the first of five the committee has scheduled about the financial crisis.

Lehman, a 158-year old firm that was the nation's fourth largest investment bank, filed for bankruptcy last month. It had been in negotiations with potential buyers but was unable to convince Bank of America and Barclays after the federal government refused to use taxpayer funds as guarantee. The announcement was followed by news that Bank of America would acquire Merrill Lynch for $50 billion.