Unrepentant Lehman ex-CEO Fuld says firm ‘was not bankrupt’

29 May 2015 | Author: | No comments yet »

Breaking Silence, Richard Fuld Speaks on Love, Putin and ‘Rocky’.

In one of his first public appearances since the firm’s demise – where it filed for the largest bankruptcy in US history – Richard Fuld claimed that the US Federal Reserve could have saved Lehman Brothers.In an appearance marking his return to the public eye, Richard Fuld Jr. insisted he doesn’t want to play “woulda, coulda, shoulda” about the collapse of Lehman Brothers Holdings Inc. The 69-year-old said the bank was “mandated into bankruptcy”, and went on to blame the 2008 global financial crisis on a “perfect storm” of factors – including rising unemployment and higher interest rates, which made mortgages unaffordable for many homeowners.

But the former chief executive, speaking Thursday to a crowd of more than 1,500 people at the Grand Hyatt hotel in Midtown Manhattan, was unrepentant about his late firm’s culture and its role in the financial crisis, largely placing the blame instead on misguided government and central-bank policy and irresponsible borrowers. Fuld offered an opinion about the Islamic State, fretted about Vladimir Putin and proposed that the economy was not nearly as healthy as the stock markets might suggest. When asked why he didn’t simply ride off into the sunset after Lehman’s collapse, Mr Fuld responded, “Why don’t you just bite me?” He quickly followed up by saying he couldn’t give up and felt he had “no choice” but to start his new firm, Matrix Advisors LLC.

You make a decision with the best information you think you have.” However, the financier admitted that “not a day goes by when I don’t think about Lehman Brothers”, adding: “I’d love to tell you I’m over it, it’s behind me – it doesn’t happen.” At an investment conference, he said his other economic concerns included the rise of Islamic State, slowing growth in China, and the aggressive leadership style of Vladimir Putin. Fuld offered a boxing analogy: “What did Rocky say? ‘It’s not how hard you hit but whether you get up after you’ve been knocked down.’ I love Rocky.” Mr. However, he was unapologetic on Thursday, suggesting that Lehman could have survived if the Federal Reserve had allowed it to, and deflected blame for the crisis onto policy makers instead of bankers.

The ex-bank executive later added lax regulators, homeowners who used equity on their houses “as ATM accounts” and the explosive growth of hedge funds as other contributors to the economic meltdown. He appeared anxious at first, removing his jacket at the podium. “I haven’t done this in a while,” he said. “This is my first public event since ’08. He defended the bank’s capital structure at the time and listed several metrics as evidence, such as its Tier 1 capital ratio of 11 per cent, which is well above the level currently required for big banks. Fuld avoided any mention of investment banks’ eagerness to issue subprime mortgages. (Lehman had an enormous portfolio of subprime loans.) At the root of the crisis, in his view, was the government’s push for homeownership. He said more information would come out that showing Lehman was “not a bankrupt company in 2008.” It wasn’t clear what Mr Fuld was referring to, and he didn’t take questions after the event.

At the same time, hedge funds, private equity firms and sovereign wealth firms grew rapidly, supercharging the global financial system and driving up equity values, balance sheets, the volume of financial products and the need for financing, he said. “The increased rates led to increased mortgage rates and payments, a huge number of residential foreclosures,” he said. “Banks wrote down and sold assets.” Part of the problem is that small companies cannot obtain financing, he said. In a scathing report in 2010, bankruptcy-court examiner Anton Valukas concluded that Lehman officials chose to “disregard or overrule the firm’s risk controls on a regular basis,” even as the credit and real-estate markets were showing signs of strain. Mr Valukas declined to comment on Mr Fuld’s remarks. “We’re playing spin the bottle for blame,” said Anthony Scaramucci, who worked at Lehman from 2003 to 2005 before founding the fund SkyBridge Capital. “The government took the bottle and pointed it toward Wall Street.” Former US Representative.

Barney Frank, a frequent critic of Wall Street and co-author of the 2010 Dodd-Frank financial-reform law, said Mr Fuld’s logic didn’t add up. “Yes there was a failure in regulation,” said Mr Frank, who retired in 2013. All of this, he said, was exacerbating income inequality. “I know you don’t want to hear this from me, but the wealthy are getting wealthier, and again, the belly of America is getting hurt,” he said. “Look, I’m a hard-core capitalist.

Fuld’s remarks. “It does really irk him a great deal” to be called a villain, said William Uchimoto, a securities lawyer who has traveled twice to China with Mr. He began by admiring the culture of the firm, noting that employees, whom he called “risk managers,” owned more than 30 percent of the $40 billion company. He looks in the mirror every day … and sees someone that did an honest effort to try to do the right things, and he will still continue to do the right things,” Mr. Third, Lehman had unencumbered collateral of $127 billion.” He then paraphrased the Rat Pack singer Dean Martin: “You know what, I feel sorry for all of you that don’t drink, ’cause when you wake up in the morning, that’s as good as you’re going to feel for the rest of the day. Fuld displayed his trademark bombast. “There’s nothing graceful about me,” he said. “I thought it was time for me to raise my ugly head.” “It’s very easy to look back.

But having said that, I do have to move on.” “My motto is, that was then, this is now,” he said. “Understanding the difference between reality and perception.

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