Barry Ritholz has a great take-down of Mr. Fuld over at Bloomberg this week...and rightly so:
Richard Fuld, the former chief executive officer of Lehman Brothers, is the Shaggy of finance. On the cause of the financial crisis and the collapse of Lehman Brothers, his claim is, "It wasn't me."
Seven years after he drove the 158-year old firm he ran with an iron fist into bankruptcy, he has reappeared to accept blame for, well, absolutely nothing. Fuld seems to believe himself blameless for either his role in the crisis or the collapse of Lehman. Speaking at a penny stock event, Fuld is still confused about the differences between ownership and control. He made the bizarre claim that "Regardless of what you heard about Lehman Brothers' risk management, I had 27,000 risk managers because they all owned a piece of the firm."
As if an employee e-mail to Fuld would have changed the firm's direction: Imagine "Hi Dick, I own 10,000 shares of Lehman. Please divest all of our risky derivatives and securitized subprime mortgages because I think we're going to take losses on them." For the man known as "The Gorilla" to make such an assertion is beyond absurd.
It goes on from there, reiterating the root causes of Lehman's collapse, lest anyone (like Fuld, perhaps?) attempt to rewrite history: Wild Overleverage, Bad Modeling Assumptions, Excessive Real Estate Exposure, Reliance on Ratings, CDO Ownership, and Repo 105, which could be least understood by the general public of them all:
Has Dick Fuld really forgotten about this accounting maneuver? On a quarterly basis, Lehman would sell short-term repurchase agreements to create the temporary appearance of cash on its balance sheet to offset some of its towering debt. This made the company look much less leveraged than it actually was. After the quarterly earnings report, the company then reversed the repurchase agreements and the cash drained from the balance sheet. It was a giant sham transaction.
Ritholz isn't done there, though (good for him!):
Fuld's claim that Fannie Mae, Freddie Mac and other so-called government-sponsored entities caused the crisis has been thoroughly, repeatedly, utterly debunked. The sort of revisionism we see from Fuld is no surprise, given his brand of delusion.
You don't need to take my word on any of this; read the Chapter 11 bankruptcy report on Lehman Brothers. It is an embarrassment of riches of the many follies of Lehman Brothers in general and the man who ran the company.
It's rather stunning that Fuld, who led Lehman from 1994 until its 2008 collapse, refuses to accept any responsibility for its failure. Even former Federal Reserve Chairman Alan Greenspan has admitted error for his role in the financial crisis; that Fuld will not is deeply revealing.
Read the entire thing. It's worth your time.
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