WASHINGTON - Days from becoming the largest bankruptcy in U.S. history, Lehman Brothers steered millions to departing executives even while pleading for a federal rescue, Congress was told Monday.
Waxman questioned Fuld on whether it was true he took home some $480 million in compensation since 2000, and asked: "Is that fair?"
Fuld took off his glasses, held them, and looked uncomfortable. He said his compensation was not quite that much.
"We had a compensation committee that spent a tremendous amount of time making sure that the interests of the executives and the employees were aligned with shareholders," he said. Fuld said he took home over $300 million in those years — some $60 million in cash compensation.
Waxman read excerpts from Lehman documents in which a recommendation that top management should forgo bonuses was apparently brushed aside. He also cited a Sept. 11 request to Lehman's compensation board that three executives leaving the company be given $20 million in "special payments."
"In other words, even as Mr. Fuld was pleading with Secretary Paulson for a federal rescue, Lehman continued to squander millions on executive compensation," Waxman said before Fuld appeared as a witness.
Waxman quoted Fuld as saying in one document, "Don't worry" to the suggestion that executives go without bonuses.
That suggestion came from Lehman's money management subsidiary, Neuberger Berman. Waxman quoted George H. Walker, President Bush's cousin and a Lehman executive who oversaw some Neuberger Berman employees, as responding with a dismissive tone to the idea of going without bonuses.
"Sorry team," he wrote to the executive committee, according to Waxman. "I'm not sure what's in the water at 605 Third Avenue today.... I'm embarrassed and I apologize."
Rep. Elijah Cummings, D-Md., said: "I wonder how he sleeps at night."
This guy was “embarrassed” by even the suggestion that executives should forgo bonuses. How uncouth for anyone to actually suggest such a thing!
I am still stunned by all this. It’s one thing to say “Oh, yeah. All these businessmen are crooks and are only out to line their own pockets.” Standard stuff. But to be continually hit in the face with it, well, it becomes much more the Truth than just a truism.
How do they sleep at night, indeed.
And, just in case people aren’t paying attention, this financial crisis is spreading to Europe. Iceland, as an entire country, appears to be on the brink of disaster.