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Curtis</font></b><font face="Arial,Helvetica,Geneva,Swiss,SunSans-Regular"><b><a href="books.html"><br> </a></b></font><font face="Arial,Helvetica,Geneva,Swiss,SunSans-Regular"><b> (310) 204-8700</b></font></p> <p><font size="2" face="Arial,Helvetica,Geneva,Swiss,SunSans-Regular"><i>Copyright October 6, 2008<br>All Rights Reserved. </i></font>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </p> <p class="MsoNormal"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<span class="style4">T</span>estifying Oct. 6 before the House Oversight and Government Reform Committee, former Lehman Bros. CEO Richard S. Fuld Jr. found himself in the hot seat explaining exorbitant bonuses and compensation paid while the business was going under.<span style="mso-spacerun: yes">&nbsp; </span> Fuld admitted, though rhetorically, he didn&#8217;t have a clue why Lehaman Bros. wasn&#8217;t bailed out<span style="mso-spacerun: yes">&nbsp; </span>by the government, like Bear Stearns, Fannie Mae, Freddie Mack and AIG, the nation&#8217;s largest insurance company.<span style="mso-spacerun: yes">&nbsp; </span>While the FBI examines Lehman&#8217;s books for any criminal wrongdoing, Fuld expressed disbelief over the Fed&#8217;s decision to turn it back on the 158-year-old investment bank founded in Montgomery, Alabama.<span style="mso-spacerun: yes">&nbsp; </span>&#8220;Until the day they put me in the ground, I will wonder,&#8221; said Fuld about why the Fed turned their back his company.<span style="mso-spacerun: yes">&nbsp; </span>Fuld admitted to Chairman Henry Waxman (D-Beverly Hills) that he earned $480 million since 2000.</p> <p class="MsoNormal"> <![if !supportEmptyParas]>&nbsp;<![endif]><span style="mso-tab-count:1">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </span>Fuld comes in the same mold as Enron&#8217;s Ken Lay and Jeffrey Skilling, either going to prison or the grave acting clueless.<span style="mso-spacerun: yes">&nbsp; </span>Fuld blamed Lehman Bros. collapse on a &#8220;crisis of confidence,&#8221; also known, back in the day, as a &#8220;run on the bank.&#8221;<span style="mso-spacerun: yes">&nbsp; </span>He blamed Lehman&#8217;s collapse not on risky investments but on J.P. Morgan who refused to extend Lehman a $17 billion line of credit.<span style="mso-spacerun: yes">&nbsp; </span>When that didn&#8217;t fly, he pointed fingers at the Treasury Dept. and Federal Reserve for not answering his prayers. After looting Lehaman&#8217;s piggy bank, Fuld felt entitled to his rewards and that of other senior management.<span style="mso-spacerun: yes">&nbsp; </span>Before the company&#8217;s stock went into oblivion, Fuld managed to enrich himself and upper management.<span style="mso-spacerun: yes">&nbsp; </span>After cleaning up, Fuld was asked by Waxman, &#8220;Is this fair?&#8221;<span style="mso-spacerun: yes">&nbsp; </span>&#8220;This is pain that will stay with me the rest of my life,&#8221; expressing regret but denying accountability.</p> <p class="MsoNormal"> <![if !supportEmptyParas]>&nbsp;<![endif]><span style="mso-tab-count:1">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </span>Fuld doesn&#8217;t know the meaning of pain like when he&#8217;s indicted, handcuffed and booked by the FBI.<span style="mso-spacerun: yes">&nbsp; </span>There&#8217;s no real pain for con artists expressing phony regret to Congressional committees but showing no compunction when he paid himself hundreds-of-millions, sending the company into a death spiral.<span style="mso-spacerun: yes">&nbsp; </span> Waxman told Fuld internal Lehman Bros. documents &#8220;portray a company in which there was no accountability for failure,&#8221; the same pattern that led former New York Stock Exchange Chairman Richard Grasso to loot umpteen millions when the exchange tanked in 2003.<span style="mso-spacerun: yes">&nbsp; </span>Fuld justified his millions while Lehman went under because it was approved by the Executive Compensation Committee.<span style="mso-spacerun: yes">&nbsp; </span> &#8220;Don&#8217;t worry&#8212;they are only people who thin about their own pockets,&#8221; wrote Fuld in an e-mail, urging the committee to reject efforts to stop millions in paid to the executive suite.</p> <p class="MsoNormal"> <![if !supportEmptyParas]>&nbsp;<![endif]><span style="mso-tab-count:1">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </span>Fuld claims he doesn&#8217;t get why the government didn&#8217;t bailout his company, blaming it on today&#8217;s credit crisis.<span style="mso-spacerun: yes">&nbsp; </span>&#8220;In other words, even Mr. Fuld was pleading with<span style="mso-spacerun: yes">&nbsp; </span>[Treasury] Secretary Paulson for a federal rescue, Lehman continued to squander millions on executive compensation,&#8221; said Wax, telling the story why the government turned its back.<span style="mso-spacerun: yes">&nbsp; </span>Fuld offered no assurance to Paulson that he would stop plundering the company before going into Chapter 7.<span style="mso-spacerun: yes">&nbsp; </span>In case Fuld hasn&#8217;t noticed, the recently passed bailout bill has specific provisions to prohibit CEOs of failing companies from collecting exorbitant compensation.<span style="mso-spacerun: yes">&nbsp; </span>Fuld didn&#8217;t think twice about protecting executive compensation at the expense of share and bond holders who were wiped out in Lehman&#8217;s bankruptcy.<span style="mso-spacerun: yes">&nbsp; </span>Fuld received $70 million in executive compensation in 2007, despite the fact that Lehman was failing.</p> <p class="MsoNormal"> <![if !supportEmptyParas]>&nbsp;<![endif]><span style="mso-tab-count:1">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </span>Fuld used the same excuse as former Enron CEO and now convicted felon Jeffrey Skilling who artfully claimed Enron&#8217;s problems were caused by a &#8220;run-on-the-bank.&#8221;<span style="mso-spacerun: yes">&nbsp; </span>Enron&#8217;s problems were in reality caused by fraudulent accounting practices, shifting bad debt to offshore accounts, while leaving the domestic balance sheet intact.<span style="mso-spacerun: yes">&nbsp; </span>Enron performed its magic with the help of now defunct Big 5 accounting firm Arthur Andersen.<span style="mso-spacerun: yes">&nbsp; </span>FBI investigators are not looking into how Lehman Bros., with the help of PricewaterhouseCoopers, might have cooked the books.<span style="mso-spacerun: yes">&nbsp; </span>Had J.P. Morgan extended Lehamn Bros. $17 billion in credit, it&#8217;s likely the cash would have disappeared and the company still would have gone under.<span style="mso-spacerun: yes">&nbsp; </span>&#8220;Lehman did not find itself in that situation by accident, it was the unlucky draw of a consciously made gamble,&#8221; said Dr. Luigi Zinales, University of Chicago finance professor.</p> <p class="MsoNormal"> <![if !supportEmptyParas]>&nbsp;<![endif]><span style="mso-tab-count:1">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </span>Reluctance to support bailout legislation stemmed from psychopaths like Fuld, who absolves himself from any accountability.<span style="mso-spacerun: yes">&nbsp; </span>&#8220;This is a pain that will stay with me the rest of my life,&#8221; said Fuld, repeating verbatim the same phony words practiced by Lay and Skilling in the Enron debacle.<span style="mso-spacerun: yes">&nbsp; </span>Fuld knew that his risky investment schemes eventually collapsed along with the rest of the real estate market.<span style="mso-spacerun: yes">&nbsp; </span>Paulson and Fed Chairman Ben S. Bernnke had little sympathy for Lehman Bros. watching upper management get away with larceny.<span style="mso-spacerun: yes">&nbsp; </span>As with other crooks in the news like former Countrywide CEO Angelo Mazillo, Fuld may feel &#8220;horrible about what happened&#8221; but until and unless he stands accountable, returns millions in unearned compensation and faces possible criminal charges he feels no real pain.<span style="mso-spacerun: yes">&nbsp; </span>Like other con artists, Fuld joins the ranks of shameless<span style="mso-spacerun: yes">&nbsp; </span>CEOs that plundered their companies.</p> <p cAbout the Author</u></b><br> <bAbout the Author</u><b>John M. Curtis</b> writes politically neutral commentary analyxing spin in national and global news.&nbsp; He's editor of OnlineColumnist.com and author of <i>Dodging The Bullet </i>and <i>Operation Charisma</i>.</p> </td> <td width="1" height="2576" rowspan="2"></td> <td width="1" height="2"><spacer type="block" width="1" height="2"></td> </tr> <tr height="2574"> <td width="133" height="2574" valign="top" align="left" xpos="0"><img height="172" width="111" src="images/johninframe3.jpg"></td> <td width="1" height="2574"><spacer type="block" width="1" height="2574"></td> </tr> <tr height="1" cntrlrow> <td width="133" height="1"><spacer type="block" width="133" height="1"></td> <td width="7" height="1"><spacer type="block" width="7" height="1"></td> <td width="182" height="1"><spacer type="block" width="182" height="1"></td> <td width="300" height="1"><spacer type="block" width="300" height="1"></td> <td width="1" height="1"><spacer type="block" width="1" height="1"></td> <td width="1" height="1"></td> </tr> </table> <table border="0" cellpadding="0" cellspacing="2" width="597"> <tr> <td><font size="1" face="Arial,Geneva,Helvetica"> <hr noshade size="1"> </font><a href="index.html"><font face="Arial,Helvetica,Geneva,Swiss,SunSans-Regular" size="2"><strong> Home</strong></font></a><font face="Arial,Helvetica,Geneva,Swiss,SunSans-Regular" size="2"><strong> || <a href="articlesindex.html">Articles</a> || <a href="books.html">Books</a> || <a href="teflon.html">The Teflon Report</a> || <a href="mailto:letters@onlinecolumnist.com"> Reactions</a> || <a href="aboutdiscobolos.html">About Discobolos</a></strong></font> <div align="left"> <p><font size="1" face="Arial,Helvetica,Geneva,Swiss,SunSans-Regular">This site designed, developed and hosted by the experts at</font><font size="2" face="Arial,Helvetica,Geneva,Swiss,SunSans-Regular"> <a href="http://www.cmeonline.net" target="_blank"><img height="30" width="138" src="images/cmelogoANIM.gif" border="0" align="absmiddle"></a></font></p> </div> <p><font size="2" face="Arial,Helvetica,Geneva,Swiss,SunSans-Regular">©1999-2005 <a href="aboutdiscobolos.html"> Discobolos Consulting Services, Inc.</a><br> (310) 204-8300<br> All Rights Reserved. </font></td> </tr> </table> </center> </body> </html>