Contrite Lehman chief defends 'excessive' bonuses

Dick Fuld, the chief executive of collapsed investment bank Lehman Brothers, was forced to defend his multi-million dollar bonuses and lavish lifestyle, as Congressional leaders tore into him in hearings on Capitol Hill.

Mr Fuld has become the face of the credit crisis since he lost his battle to save the firm he has led for 15 years, and his appearance yesterday was the first of a string of hearings that furious lawmakers are planning into the evolution of the banking crisis.

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The collapse of Lehman last month began a chain reaction in the deriv-atives markets that came close to a full-scale financial panic and prompted the US government to propose an unprecedented $700bn bailout for Wall Street – against the wishes of an American public that wanted to see super-remunerated bankers punished for their excesses.

Mr Fuld's cautious and contrite performance in front of the House of Representatives oversight committee reflected the risk that he could find himself personally under investigation over the events leading to Lehman's bankruptcy filing.

He said he took full responsibility for Lehman's demise, that he felt "horrible" about the losses faced by employees, many of whom had fortunes tied up in the firm's shares, and he insisted that he had personally lost tens or hundreds of millions of dollars.

The committee chairman, Henry Waxman, reeled off details of Mr Fuld's large art collection, multiple houses and what he said was the "half a billion dollars" that the chief executive had taken home over his time at the helm of the company, and then asked him to compare that with the losses faced by shareholders and the damage done to the wider economy. "Is that fair?" Mr Waxman asked.

Mr Fuld paused, took off his glasses, and answered: "The majority of my compensation came in stock. The vast majority of stock I got I still owned at the point of our filing... The $500m number is not accurate, although it is still a large number."

Dennis Kucinich, the left-wing former presidential candidate, attacked Mr Fuld for insisting in the week leading up to its bankruptcy that Lehman did not have a liquidity problem, and had plenty of cash on its books. He asked whether Mr Fuld lied; the chief executive said that he never misled investors.

In his prepared testimony, read to members of the committee at the start of the hearing, Mr Fuld said: "As incredibly painful as this is for all those connected to or affected by Lehman Brothers, this financial tsunami is much bigger than any one firm or industry. This is a crisis for the entire global economy."