Lehman Brothers CEO makes CNNs' top 10 culprits in the economic collapse listNumber 2 named—Richard Fuld of CEO of Lehman Brothers
Anchor Anderson Cooper tells us that politicians will preach that "now is not the time to place blame." He recalls the same rhetoric during the Katrina debacle. His stance is that attention will soon pass, and when it does, the responsible parties will go on their merry way and, as usual, leave the taxpayers holding the bag. Whether you agree or disagree, you have to admit, he has a point.
Since it is the American people who will foot the bill for this mess, we deserve to at least know how we got here. Cooper pulls no punches in naming names. Whether these responsible parties will be held accountable is yet to be seen.
The second name on the list is former CEO of Lehman Brothers, Richard Fuld. Before you feel too sorry for Mr. Fuld because of the loss of his position at Lehman, you should know that he is sitting pretty. He has a multi-million dollar estate in Florida, a $21 million Park Avenue apartment, and a lavish estate in Greenwich, Connecticut. He was paid around $500 million during his tenet as CEO. Before the crisis of the past two years, the Lehman Brothers investment bank has been among the industry leaders in mergers and acquisition advice, debt and equity underwriting, and global finance. But they reported nearly $7 billion in losses after becoming embroiled in the global credit crisis of 2007 and 2008. In attempts to stay afloat the company has entered into talks with foreign investors, tried to restructure, searched for a buyer for the company, and appealed to the government to bail them out. All their scurrying around was too little too late, and the company finally filed for Chapter 11 bankruptcy in late 2008.
Fuld was put on the hot seat and was called "the villain" in congressional inquiries. Henry Waxman, a democratic representative from California pressed him saying, "Your company is now bankrupt, our economy is in a…crisis, but you get to keep $480 million…Is this fair?" After several silent moments of squirming in his seat, Fuld removed his glasses in what appeared to be an effort to be sincere, and replied that he did well when the company did well and did not do well when the company did not.
In actuality, when reports of numerous foreclosures first emerged, Fuld made a seismically bad judgment call. He barreled ahead and bought up billions in bad loans gambling that people were making a mountain out of a mole hill—that the loans were not as "bad" as reported. He stood to make a colossal fortune if he was right. When loans continued to foreclose in record numbers, he is accused of hiding the truth from stockholders in a conference call that took place only five days before Lehman filed for bankruptcy. When questioned under oath on Capital Hill about the call, Fuld claimed ignorance. Federal investigators are looking into Lehman and more than two dozen other companies regarding fraud and deception of stockholders.
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