Where was our US bailout: Lehman

Font Size

Print

Feedback

Email

Discuss

Related Articles

House must pass US bailout: Bush

Washington, October 7:: do not get a bonus."

Rep. Waxman said Fuld's compensation did not seem fair given the fact that Lehman collapsed, wiping out all shareholder value.

"You still got substantial compensation," Waxman said.

Republicans on the committee also expressed outrage over corporate behavior.

After the hearing, top Republicans on the panel asked Waxman to hold a hearing on Fannie Mae and Freddie Mac's role in the financial crisis. Rep. John Mica, a Florida Republican, also said he asked committee staff to explore the possibility of a special counsel investigation of Fannie Mae and Freddie Mac.

The Federal Reserve and Treasury Secretary Henry Paulson undertook a series of emergency measures to rescue mortgage finance companies Fannie Mae and Freddie Mac. US authorities also orchestrated a deal to sell Bear Stearns to JPMorgan Chase & Co.

However, as Lehman's stock continued to plummet and the investment bank was unable to secure a buyer, Paulson was adamant that no government money be used to rescue Lehman.

"Had that decision been different, further dislocations in the markets might have been avoided," Fuld said.

Fuld blamed several events for Lehman's downfall, including abusive short selling, false rumors, credit agency downgrades and loss of confidence by clients and counterparties.

Over the summer, Fuld said Lehman discussed with the Fed the possibility of converting to a bank holding company, the structure Goldman Sachs and Morgan Stanley have adopted.

Fuld said the Fed acted too late to broaden the types of collateral that banks could pledge to create liquidity.

"Had these changes been made sooner, they would have been extraordinarily helpful to Lehman," Fuld said.