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 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.In a rambling speech at the Marcum MicroCap Conference at the Grand Hyatt New York in Midtown Manhattan — his first public appearance since the financial crisis — Mr. 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. Fuld, known as “the Gorilla” of Wall Street for his brusque style, was eager to share his views about the world, he assiduously avoided talking about his role in the largest bankruptcy in United States history. “What did Sigmund Freud say? ‘You can say whatever you want about me. 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.

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. Mr Fuld started his remarks with a brief discussion of what he described as Lehman’s client-first culture and its compensation practices, which he said fostered a sense of teamwork. “Regardless of what you heard about Lehman’s risk management, I had 27,000 risk managers, because they all owned a piece of the firm,” he said. Mr Fuld ended his talk on a reflective note, encouraging members of the audience to “balance between life and death all the time,” “create your own luck,” and “be able to open your heart, love and be loved.” He counselled the audience to, like him, live life with no regrets but admitted that “not a day goes by” where he doesn’t think about Lehman Brothers. 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. There is no ‘if’ or ‘woulda coulda shoulda,’ ” he said. “You can only make a decision at any specific time with the best information that you think you have.” Asked what he could have done differently, he avoided answering directly, and instead said, “I think I missed the violence of the market and how it spread from one asset class to the next. 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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