US Congress targets Richard Fuld over salaries, bonuses
US Congress targets Richard Fuld over salaries, bonuses
October 07, 2008
US Congress has demanded that the head of Lehman Brothers justify some $US500 million he earned since 2000.
As US lawmakers grilled Richard Fuld on his own earnings, he has also been asked to explain the huge bonuses sought for top executives as the bank failed.
Mr Fuld, the chief executive officer of Lehman Brothers, the investment bank that fell prey in September to the credit crunch, was called to account by the House of Representatives oversight committee.
Committee chairman Henry Waxman targeted Mr Fuld, saying that he had earned some $US500 million ($690 million) in bonuses and wages from Lehman Brothers. Mr Fuld owned a $US14 million getaway in Florida, as well as a home in Idaho filled with an art collection, Mr Waxman said.
And he pointed to an internal Lehman email in which the bank's compensation committee recommended, as late as September 11, giving golden handshakes of more than $US20 million to be shared among three departing executives.
“In other words, even as Mr Fuld was pleading with Secretary (Henry) Paulson for a federal rescue, Lehman continued to squander millions on executive compensation,” Mr Waxman told the committee.
The hearings are the start of a series of probes promised by Congress - which on Friday passed an unprecedented $US700 billion ($980 billion) rescue package to shore up Wall Street - amid the country's worst economic crisis since the Great Depression in the 1930s.
Mr Waxman told Mr Fuld: “You've been able to pocket close to half a billion dollars and my question to you is, ‘Is that fair for a CEO of a company that's now bankrupt’.
“It's just unimaginable to so many people”.
Figures provided by Lehman Brothers showed that Mr Fuld received some $US52 million from the bank in 2000. By 2006, that had ballooned to more than $US106 million.
But Mr Fuld disputed that he had pocketed that much in eight years, saying: “I would say to you that that 500 number is not accurate.
“I think for the years you're talking about here I believe my cash compensation was close to $US60 million and the amount I took out of the company over and above that was closer to $US250 million. Still a large number though.”
In a series of written testimonies received over the weekend, Mr Waxman said that Mr Fuld “takes no responsibility for the collapse of Lehman”.
“Instead, he cites a 'litany of destabilising factors' and says that 'in the end, despite all our efforts, we were overwhelmed'.”
Lehman Brothers sought bankruptcy protection on September 15 after a frantic weekend of talks failed to find a buyer for the Wall Street giant that has been ravaged by credit and real estate woes.
The massive bankruptcy filing in the US federal court in New York listed $US639 billion in assets and $US613 billion in debts, prompting a bloodbath on the global financial markets.
Japan's Nomura Holdings is buying a swathe of Lehman’s operations in Europe, Asia and the Middle East, after British bank Barclays sealed a $US1.75 billion deal to acquire its investment banking and trading units.
“We can't continue to have a system where Wall Street executives privatise the gains and then socialise the losses. Accountability needs to be a two-way street,” Mr Waxman said.
“Many experts think Lehman's fall triggered the credit freeze that is choking our economy, and that made the $US700 billion ($A913 billion) rescue necessary.
“Mr Fuld will do fine. He can walk away a wealthy man, who earned over $US500 million. But taxpayers are left with a $US700 billion bill to rescue Wall Street and an economy in crisis.
“While Mr Fuld and other Lehman executives were getting rich, they were steering Lehman Brothers and our economy toward a precipice.”
US Congress targets Richard Fuld over salaries, bonuses
October 07, 2008
US Congress has demanded that the head of Lehman Brothers justify some $US500 million he earned since 2000.
As US lawmakers grilled Richard Fuld on his own earnings, he has also been asked to explain the huge bonuses sought for top executives as the bank failed.
Mr Fuld, the chief executive officer of Lehman Brothers, the investment bank that fell prey in September to the credit crunch, was called to account by the House of Representatives oversight committee.
Committee chairman Henry Waxman targeted Mr Fuld, saying that he had earned some $US500 million ($690 million) in bonuses and wages from Lehman Brothers. Mr Fuld owned a $US14 million getaway in Florida, as well as a home in Idaho filled with an art collection, Mr Waxman said.
And he pointed to an internal Lehman email in which the bank's compensation committee recommended, as late as September 11, giving golden handshakes of more than $US20 million to be shared among three departing executives.
“In other words, even as Mr Fuld was pleading with Secretary (Henry) Paulson for a federal rescue, Lehman continued to squander millions on executive compensation,” Mr Waxman told the committee.
The hearings are the start of a series of probes promised by Congress - which on Friday passed an unprecedented $US700 billion ($980 billion) rescue package to shore up Wall Street - amid the country's worst economic crisis since the Great Depression in the 1930s.
Mr Waxman told Mr Fuld: “You've been able to pocket close to half a billion dollars and my question to you is, ‘Is that fair for a CEO of a company that's now bankrupt’.
“It's just unimaginable to so many people”.
Figures provided by Lehman Brothers showed that Mr Fuld received some $US52 million from the bank in 2000. By 2006, that had ballooned to more than $US106 million.
But Mr Fuld disputed that he had pocketed that much in eight years, saying: “I would say to you that that 500 number is not accurate.
“I think for the years you're talking about here I believe my cash compensation was close to $US60 million and the amount I took out of the company over and above that was closer to $US250 million. Still a large number though.”
In a series of written testimonies received over the weekend, Mr Waxman said that Mr Fuld “takes no responsibility for the collapse of Lehman”.
“Instead, he cites a 'litany of destabilising factors' and says that 'in the end, despite all our efforts, we were overwhelmed'.”
Lehman Brothers sought bankruptcy protection on September 15 after a frantic weekend of talks failed to find a buyer for the Wall Street giant that has been ravaged by credit and real estate woes.
The massive bankruptcy filing in the US federal court in New York listed $US639 billion in assets and $US613 billion in debts, prompting a bloodbath on the global financial markets.
Japan's Nomura Holdings is buying a swathe of Lehman’s operations in Europe, Asia and the Middle East, after British bank Barclays sealed a $US1.75 billion deal to acquire its investment banking and trading units.
“We can't continue to have a system where Wall Street executives privatise the gains and then socialise the losses. Accountability needs to be a two-way street,” Mr Waxman said.
“Many experts think Lehman's fall triggered the credit freeze that is choking our economy, and that made the $US700 billion ($A913 billion) rescue necessary.
“Mr Fuld will do fine. He can walk away a wealthy man, who earned over $US500 million. But taxpayers are left with a $US700 billion bill to rescue Wall Street and an economy in crisis.
“While Mr Fuld and other Lehman executives were getting rich, they were steering Lehman Brothers and our economy toward a precipice.”
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