Dick Fuld, the former chief executive of Lehman Brothers, let loose his bitterness at the US government's failure to save his investment bank in 2008, saying that the company was "sound" even in the dying hours of the Sunday that sealed its fate.
Making only his second public appearance to discuss the events of September 2008, in testimony before the Financial Crisis Inquiry Commission, Mr Fuld roundly defended his own actions.
"Other firms were hurt by their plummeting stock prices and widening credit default swap spreads," he said. "But Lehman was the only firm that was mandated by government regulators to file for bankruptcy."
Almost two years after the events that sank Lehman, reshaped Wall Street and caused the seizing up of vital capital markets, key details of that fraught weekend remain unclear, and Mr Fuld clashed yesterday with a representative of the New York branch of Federal Reserve Bank over whether it should have been given assess to emergency loans from the central bank.
Seated at the opposite end of the four-person panel of witnesses, the New York Fed's counsel, Thomas Baxter, said lending to Lehman would have been "a bridge to nowhere" that did not resolve the problem.
"The market no longer had confidence in Lehman," Mr Baxter added. "We saw no end to the run."
Mr Fuld persisted in his version of events: that Lehman was brought to the brink of ruin by false rumours about its finances, including its investments in mortgage derivatives and real estate, and then finished off by the inaction of the authorities.
During the run on the bank, Lehman suggested it should be allowed to convert from an investment bank to a bank holding company, to allow it to take in deposits, or that the authorities ban naked "short-selling" – speculation on the downward move of share prices. The policies were introduced for other banks just a week later.
"There is no question we made some poorly-timed business decisions and investments, but we addressed those mistakes and got ourselves back to a strong equity position," Mr Fuld said. "We also had financeable collateral and solidly performing businesses. There is nothing about this profile that would indicate a bankrupt company."
Asked by one commissioner why he thought Lehman had been unable to stop the loss of market confidence, he replied: "Why were we not able to put a stake in the ground, to say, 'This is where we are, believe it,' and move on? I do not know." And then, shrugging, and with a grimace, he added: "I do not know. I do not know."
Lehman filed for Chapter 11 bankruptcy on 15 September, the small hours of a Monday morning, after two days of intense talks aimed at finding a buyer to take over the firm failed. Harvey Miller, a veteran bankruptcy lawyer called in by Lehman, said that history would judge as a terrible mistake the government's decision not to help the company. The US Treasury faced political criticism for having assisted Bear Stearns the previous March and feared the reaction to using public money for a bailout.
"It appears that the decision to apply moral hazard was ill-advised," Mr Miller testified. "The government appears to have concluded that [while] the day of Lehman's bankruptcy would be tumultuous and disconcerting, by Tuesday the concern would have contracted, and by Wednesday it mostly would be a historical fact. If that was the government's belief, it was a serious miscalculation."Reuse content