"With the benefit of hindsight," he said in his testimony, "I can now say that I and many others were wrong." For this he earned $480 million in pay since 2001? Forgive me while I roll around on the trading floor laughing.
For the better part of a year, David Einhorn, the hedge fund investor, railed against Lehman, its lightweight chief financial officer and its numbers that didn't quite add up. J.P. Morgan Chase & Co. and Lehman's counterparties questioned the values that Lehman was assigning to its troubled real estate assets. See full story. Someone get a shovel. It's getting pretty deep in the gorilla's cage.
A big shovel, plu-eez.
Several people who negotiated with Lehman during the past six months tell me that Fuld overvalued the firm by amounts that left no room for further negotiation. Offered a series of lifelines that would have given Lehman the independence Fuld seemed so hell-bent on preserving, he passed.
That's what I saw, only recently, say in the last month: arrogance.
Were Lehman's demise limited to lost jobs, it would be shameful. That Lehman's spectacular collapse, which fueled the inferno that is now raging through our financial and economic system, was preventable is infuriating. But even that debacle is not entirely Fuld's fault. His mistakes were covered up by a system that rewards obfuscation and deception.
It is a systemic virus: not only is greed extolled, but money is worshipped.
So, when this mess is finally over, the government – if it's still around – should require banks to open up the books. No more hiding everything in off-balance-sheet transactions, no more "proprietary trading" for Goldman Sachs Group Inc. Accounting firms need to do some real accounting or stop wasting shareholders' money. Ratings agencies should have a stake in every rating they make or miss. Let hedge funds be strictly regulated.
Free-market proponents say they can't make money when they reveal trading positions. Such information is proprietary. Well, Lehman reported a $2.8 billion loss at the end of May.
Does transparency solve all problems? No. But it helps discourage and catch the cheaters.
Even a gorilla can figure that out.