Appearing before the House Oversight and Government Reform committee, Fuld denied any responsibility for Lehman’s collapse, producing an impressive list of mitigating circumstances ranging from his bete noire, short sellers, through credit agency downgrades, loss of client confidence and of course that old favourite, a hostile media. Someone should have told him to blame the weather, too – everyone else does.
At least he seems to have dropped the appalling habit of referring to himself in the third person – but that apart, signs of humility or even repentance from the ex-Master of the Universe were few and far between. He did everything he could to save the firm, he claims, and while he accepts ‘responsibility for his actions’ he does not accept any responsibility for Lehman’s eventual fate. Eh?
That’s a rather technical distinction between cause and effect, which shareholders and former employees may prefer not to recognise. If not he, then who? $300m over the last eight years (the amount he's taken home since 2000) is a lot to pay a passenger, however good his spiel. Surely one of the key clauses in any chief exec’s ‘psychological contract’ is a degree of de facto responsibility for what happens on your watch, whatever the ultimate cause. After all, Fuld was perfectly happy to take the credit – and the vast sums of cash – when Lehman was a Wall Street star.
He, and others like him, were not conspicuously generous towards those outside influences which, to follow his current chain of logic, must have been as responsible for Lehman’s success then as they are for its bankruptcy now. Or did he somehow mysteriously stop being in charge when the share price started to tank? Perhaps his mum gave him a note to show teacher when Hank, Ben and the rest of the big boys in the playground got a bit too rough.
Apart from the growing levels of incomprehension from chairman Henry Waxman over Fuld’s apparent inability to grasp the vastness of the sums involved to ordinary people, one other thing stood out from the hearing. Fuld clearly had an unshakeable belief that, however bad things got, the government would ultimately bail Lehman out. So he was essentially playing a great big game of chicken with the US taxpayer, and he lost. ‘Until the day they put me in the ground’, he said, he would continue to wonder why AIG was judged worth saving and Lehman’s was not. It’s called systemic risk, Dick, and there’s a lot more of it about since your little caper.
Of course, finger-pointing - however well deserved – is not going to help us get out of this mess. But without measures to stop people as powerful as Fuld once was from losing their grip on reality so comprehensively ever again, there’s a real danger that history will simply repeat itself.