A Fallen Titan's Carefully Chosen Words
Richard S. Fuld Jr., former chief executive of the now-bankrupt Lehman Brothers investment bank, was the first financial titan to testify at the first congressional hearing aimed at finding the root causes of the nation's financial crisis.
There were no major revelations during yesterday's hearing, The Associated Press noted. But it did allow lawmakers to grill one of the corporate heads who earned hundreds of millions on seemingly risky investments that ultimately led to the economic meltdown.
"You made all this money by taking risks with other people's money," said Rep. Henry Waxman (D-Calif.), the panel's chairman. "The system worked for you, but it didn't seem to work for the rest of the country and the taxpayers, who now have to pay $700 billion to bail out our economy."
Many of the questions Fuld answered focused on his large cash bonuses (and a Wall Street Journal report that said the FBI had begun an investigation into whether Lehman executives misled investors about the company's financial condition). As CEO, 62-year-old Fuld personally netted $40 million last year, including a $4.3 million bonus. His total compensation during the company's best four years, between 2003 and 2007, were more than $260 million.
But to describe his company's downfall, Fuld used somewhat subdued terms in front of the House Oversight and Government Reform Committee. One of the most-commonly used words Fuld employed was "believe" (which he said 31 times). He used the words "sorry" 12 times (although he did not actually apologize for any personal or corporate wrongdoing, he rather took "full responsibility" for Lehman's failure, saying he was "wrong"); "shareholders" eight times and "risk" five times.
Here's a look at some of the most common words Fuld used during his question-and-answer session with congressional lawmakers and some of the examples of his word choice:
"At the end of 2007, I did not believe, at the time, that we had a liquidity problem. And our most important assets in the firm are clearly our employees. They are the ones that touch the clients every day and do business every day."
"I'd like this committee also to know I got no severance. I got no golden parachute. I had no contract. I never asked for a contract. I never sold my shares. That's why I had 10 million, because I believed in this company. I believed that this company -- that's why I said, 'I'm glad I got these last two quarters behind us. I believe we're on the right track.' I could have sold that stock. I did not, because I firmly believed that we were going to return back to profitability and get back on the road."
"The majority of my stock, sir, came -- excuse me, the majority of my compensation came in stock. The vast majority of the stock that I got, I still owned at the point of our filing (bankruptcy)."
"I, like a number of other people, thought the mortgage crisis was contained to residential mortgages. There were a number of people -- many experts included -- that also thought that. And I was wrong."
"Look, I am not proud of the fact that I lost that much money. But it does show that the system, our compensation system, did work. I left 10 million shares plus a whole number of options. As I said, I'm not proud of that. But when the firm did not do well, I was probably the single largest individual shareholder. I don't expect you to feel sorry for me. I don't mean that. That's not my point. My point, though, is that the system worked."
By Derek Kravitz |
October 7, 2008; 7:18 AM ET
Previous: A Look Back at the 'Keating Five' | Next: 'Light' Cigarette Debate, Stevens Trial, Wiretapping in Brazil
Please email us to report offensive comments.
Posted by: Alex | October 7, 2008 8:27 AM
Posted by: norom | October 7, 2008 8:31 AM
Posted by: Lisa | October 7, 2008 8:44 AM
Posted by: arthur | October 7, 2008 8:47 AM
Posted by: M.L. Bushman | October 7, 2008 8:50 AM
Posted by: Robert | October 7, 2008 9:10 AM
Posted by: David | October 7, 2008 9:18 AM
Posted by: Joe Allard | October 7, 2008 9:23 AM
Posted by: Will | October 7, 2008 9:42 AM
Posted by: Andrew Gallagher (Monaco) | October 7, 2008 9:52 AM
Posted by: Prasad | October 7, 2008 10:08 AM
Posted by: TJ | October 7, 2008 10:13 AM
Posted by: Anti-Robert | October 7, 2008 10:19 AM
Posted by: LS | October 7, 2008 10:26 AM
Posted by: Thomas | October 7, 2008 10:29 AM
Posted by: dawna | October 7, 2008 11:34 AM
Posted by: Anonymous | October 7, 2008 2:08 PM
Posted by: PacificGatePost | October 7, 2008 3:08 PM
Posted by: Andrew Gallagher (monaco) | October 8, 2008 5:09 PM