keywords: lehman brothers bankruptcy, richard fuld, sub-prime home mortgage crisis, congressional hearing
Synopsis: The Lehman Brothers bankruptcy filing on September 15, 2008 was the largest bankruptcy filing in U.S. history and was caused by unprecedented losses due to the sub-prime home and commercial mortgage crisis. On October 10, 2008 Richard Fuld, head of Lehman, faced a Congressional Committee On Oversight and Reform to answer questions on the events that lead to the financial collapse of Lehman Brothers... (read more)
It was a contentious hearing in which some appeared to feel Richard Fuld was being evasive and not completely truthful. Congressman Tierney quoted a report that Lehman accounting has some aggressive and bizarre accounting practices that inflated their profit in prior quarters and gave several examples.
Fuld was also questioned on the inconsistencies between the public statements he made concerning the financial condition of Lehman and the internal memos he received that the financial conditions were in question. Several examples of these inconsistencies were cited. The plan to form a new entity called Spinco and means to raise capital and obtain additional funds for collateral was discussed.
Fuld was asked what could he have differently to prevent the collapse of Lehman Brothers and gave details of what he could and should have done in hindsight.
