Lehman sought millions for execs while seeking aid

NF Reporter · 10-06-2008, 08:14 PM

AP - The now-bankrupt investment bank Lehman Brothers arranged millions in bonuses for fired executives as it pleaded for a federal lifeline, lawmakers learned Monday, as Congress began investigating what went so wrong on Wall Street to prompt a $700 billion government bailout.

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waltky · 10-07-2008, 12:00 AM

In coming years, we will look back and see how we forfeited our economic position to China...

Lehman Bros head took home $300m
Tuesday, 7 October 2008 - The head of failed US investment bank Lehman Brothers has told Congress that he took home about $300m in pay and bonuses over the past eight years.

Quote:

Richard Fuld, whose firm went bankrupt last month, made the statement during testimony before the House Oversight and Government Reform Committee. The panel is holding its first hearing into the cause of the financial crisis. It is being held amid renewed market turmoil, with shares plummeting further in Europe and the US. Committee chairman Henry Waxman opened the hearing by saying the credit freeze threatened the entire economy. "To restore our economy to health, two steps are necessary," he said. "First, we must identify what went wrong. Then we must enact real reform of our financial markets."

'Feeling horrible'

Turning to Mr Fuld, Mr Waxman asked whether it was true he had received $480m (£276.2m) in pay and bonuses since 2000 - and whether this figure was fair. Mr Fuld replied that the correct total was about $300m (£172.6m). "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. Mr Waxman also criticised Mr Fuld for requesting multi-million dollar bonuses for departing executives just days before last month's collapse.

"In other words," he added, "even as Mr Fuld was pleading with [Treasury] Secretary [Henry] Paulson for a federal rescue, Lehman continued to squander millions on executive compensation." Mr Fuld said he took "full responsibility for the decisions that I made and for the actions that I took" and defended his actions as "prudent and appropriate" based on information he had at the time. "I feel horrible about what happened," he added. Lehman's failure set off a financial panic which prompted a $700bn rescue package approved by Congress last week.

BBC NEWS | Americas | Lehman Bros head took home $300m

waltky · 10-18-2008, 11:56 PM

G-men goin' after their butts...

Probe of Lehman collapse escalated: report
Sat Oct 18, 2008 - Prosecutors have stepped up the investigation into the collapse of Lehman Brothers, with at least a dozen subpoenas being issued including one to the investment bank's chief executive, Richard Fuld, The New York Times reported on Saturday.

Quote:

Citing people close to the probe who requested anonymity, the Times said federal prosecutors in Brooklyn, Manhattan and New Jersey were examining events leading to Lehman's collapse and bankruptcy filing. One person said New Jersey prosecutors were looking into whether Lehman executives including Fuld misled investors involved in the $6 billion infusion of capital announced by Lehman in June about the bank's condition, the Times said. That infusion came as Lehman disclosed a $2.8 billion third-quarter loss, which caused its shares to plunge.

The Times said the New Jersey Division of Investment, which put money into the capital raising, had been subpoenaed, and that the division's director did not return a call seeking comment. Brooklyn and Manhattan prosecutors meanwhile are looking into remarks made by Lehman executives during a September 10 conference call, which was five days before the company's bankruptcy filing, the newspaper said, and are also investigating whether Lehman assigned proper values on its large commercial real estate holdings. It remains unclear whether any of the offices will bring their cases, the newspaper said.

And while the Times said no conclusions had been drawn, legal experts expected prosecutors would likely try to build fraud cases against Lehman executives by finding internal documents that contradicted public statements about the bank's status. Representatives of the prosecutors' offices declined to comment, as did a spokesman for Fuld, the Times said, although Fuld has said his statements about Lehman's condition were based on the best information he had at the time. Other subpoenaed current and former Lehman executives include Joseph Gregory, the former president, and Erin Callan, former chief financial officer, the Times said, citing a person with knowledge of the matter.

Probe of Lehman collapse escalated: report | Reuters

waltky · 10-24-2008, 11:35 PM

Usin' the bailout to conceal bonuses...

Kucinich on Bonuses: 'This Is a Disgrace'
Oct. 23, 2008 - Bailed-Out but Still Giving Bonuses; Questions Loom Over How Much Cash Wall Street Firms Are Still Paying Executives

Quote:

Fear that Wall Street firms receiving billions of taxpayer dollars in aid might still go ahead with hefty executive bonuses has led one U.S. congressman to start investigating compensation packages. Rep. Dennis Kucinich, D-Ohio, who is chairman of the Domestic Policy subcommittee of the House Committee on Oversight and Government Reform, said he plans to ask banks and brokerages to detail their employee pay packages.

Kucinich voted against the $700 billion bailout package, saying that he "had great suspicions" that the money wouldn't help stop the flood of foreclosures. Reining in excessive executive compensation was promised as part of the bailout plan. Now it appears, Kucinich said, that such promises aren't coming true and that some firms might even be using the cash from the federal bailout to reward employees. "That raises questions about the legitimacy of the bailout and we really need to find out how widespread this is," he told ABC News today.

Kucinich's concerns stem from a recent report by London's The Guardian that more than $70 billion in bonuses might be paid out by Wall Street banks this year. The firms named by the British paper include Citigroup, Goldman Sachs and Morgan Stanley.

"This is a disgrace," Kucinich said, adding that some additional congressional action may be warranted. "The bailout continues to be perverted by those who led us into the problem to begin with and who stand not to just profit in a corporate sense but to profit personally through bonus packages." Kucinich does not have confirmation of The Guardian's report but hopes to get some answers. "No one is denying that this is happening," he said. "That AIG took action confirms that it's happening. We just have to see the extent of it."

More ABC News: Bailed-Out but Still Giving Bonuses