Ex-Lehman Brothers Chief Excutive Richard Fuld told members of the Financial Crisis Inquiry Commission on Wednesday that the Federal Reserve (Fed) helped create the domino effect that put the 2008 Wall Street collapse in motion.
In a hearing on Capitol Hill, Fuld denied speculation that bad judgment on his part led Lehman to fail. Instead, Fuld said in prepared remarks that “Lehman was forced into bankruptcy not because it neglected to act responsibly or seek solutions to the crisis, but because of a decision, based on flawed information, not to provide Lehman with the support given to each of its competitors and other non-financial firms in the ensuing days.”
Fuld pointed to rumors in 2008 that Lehman did not possess the necessary capital to back its investments as one of the reasons it went bankrupt. Additionally, Fuld lamented the fact that the federal government chose not to deem his former company as being ‘too big to fail.’
“Had Lehman been granted that same access as its competitors…Lehman would have had time for at least an orderly wind down or for an acquisition which would have alleviated the crisis that ensued,” said Fuld.
Today’s hearing is one of a series that have been held by the commission as it prepares to release a report on the 2008 financial collapse to the President and Congress by mid-December. The commission will hear from both Fed Chairman Ben Bernanke as well as Federal Deposit Insurance Corporation (FDIC) Chair Sheila Bair tomorrow.