Richard Fuld, former chief executive of now-defunct investment bank Lehman Brothers, has found another reason to be unhappy. On Wednesday, he told the Financial Crisis Inquiry Commission that Lehman could have and should have been saved by the Fed. In short, as Peter Henning summarizes in The New York Times, Lehman was a "viable enterprise destroyed by outside forces," a "victim" of federal favoritism. Really? Bloggers are vacillating between strongly skeptical of Fuld's remarks and just plain irritated.
- Let's Go Through This Step By Step "I'm not sure if this is the issue we really need to get to the bottom of," says Time's Stephen Gandel, who wishes the commission would be focusing on more pressing matters, like how to avoid another crisis. Nevertheless, he continues, "I will play along." Gandel goes through the main arguments, including the Fed's assertion that "the Federal Reserve was legally not allowed to bail Lehman out." That argument has always seemed "a little weak" to him, he says, and reviews the evidence. "POINT: Fuld," he determines. On the other hand, the Fed's assertion that "even if it was able or willing to lend to Lehman, the investment bank didn't have enough collateral to back up the amount of money it needed to save the firm" is solid. In the end, he decides:
Even though the count is two to one, I have to give the fight to the Fed. Even if their after the fact, effort to rewrite history is annoying. In the end, whether Lehman would have survived had little to do with what the Fed was or wasn't willing to do. If the firm was insolvent, eventually it was going to go under.
- What Is Fuld, a 'Masochist'? Either that or a "narcissist," says Jon Berr at 24/7 Wall St. "Why else would the former Wall Street CEO continue to insist that it was the federal government's fault ... ?" The bailouts ultimately, says Berr, "were largely a success and taxpayers have had their loans paid back with interest." But "bailing Lehman out," on the other hand, "would have been a disaster."
- He's Got One Good Point, admit Richard Beales and Rob Cox for Reuters Breakingviews: "regulators were damagingly inconsistent." The rest of it is absurd, they say: calling Lehman's failure the result of "'uncontrollable' market forces, false rumors and the lack of a government rescue" fails to account for Fuld's own "hubris and failure to buttress the firm."
- Oh, Please: What Is This Nonsense? "To think that Fuld's brand of psychopathic revisionism was given a sympathetic hearing is deeply disturbing," writes finance professional and blogger Barry Ritholtz, who then goes back to review "why Lehman crashed and burned" and why the Fed didn't intervene. By way of conclusion: "I haven't written this before, but now I am compelled to: I now fear the FCIC report is going to be an ideological farce. The nightmare report scenario is a collection of false statements, half truths, misunderstandings, confirmation biases, and rhetorical nonsense."
- 'Complete Frauds [Who] Have No Idea What Capitalism Is About' is the name Chris Ryan at Americablog gives to bankers. "Shouldn't [Fuld] have thought about the consequences of gambling before they required a bailout?" he asks. Bankers, he continues, "all spent millions to lobby for unregulated markets so let them live with the end result." He calls Fuld's request "socialism for CEOs."
- Why Fuld Might Have Said This "Characterizing [Lehman] as a victim and not a perpetrator of any wrongdoing," writes The New York Times' Peter Henning, "may be a way of supporting a defense that there was no intent to defraud investors should any civil charges should be filed."