Fuld criticises Lehman's investigators 'distortions'

The former head of Lehman Brothers has hit out at the investigator who accused the bank of masking debts with an accounting trick, saying he had "distorted the facts" and Lehman's employees had been "unfairly vilified".

Dick Fuld, chief executive of the 158-year old bank when it collapsed in 2008, launched a robust defence of the group's practices to the US House of Representatives Committee on Financial Services yesterday.

The statements came just weeks after a bankruptcy court-appointed investigator published a 2,200 page report into Lehman's demise.

Anton Valukas criticised the bank for using the so-called Repo 105 tactic to improve its balance sheet by $50bn. The "gimmick" - according to the report - allowed the bank to sell toxic securities, removing them from the balance sheet before disclosure in quarterly results, with an agreement to buy them back shortly after. Yesterday market Mr Fuld's first official response to the report.

Mr Fuld, who ran Lehman for 17 years, said he has "absolutely no recollection whatsoever of hearing anything about Repo 105 transactions while I was chief executive of Lehman". In fact, the first time he remembered hearing the term was when Mr Valukas quizzed him on the subject a year after Lehman filed for bankruptcy.

The group did not use Repo 105 to remove toxic assets from its balance sheets, he said, and they were not used to hide Lehman's assets.

It was not true to say Repo 105 contributed to Lehman's bankruptcy, Mr Fuld said, which left the world's financial markets reeling. "Lehman was forced into bankruptcy amid one of the most turbulent periods in our economic history, which culminated in a catastrophic crisis of confidence and a run on the bank."

He believes the report drawn up by Mr Valukas "distorted the relevant facts, and the press, in turn distorted the examiner's report. The result is that Lehman and its people have been unfairly vilified."

Mr Fuld said that despite "misconceptions" about the company's valuation of its mortgage and real estate assets, liquidity and risk management, the investigator "found no breach of duty by anyone at Lehman with respect to any of these".

He said: "The world still is being told that Lehman had a huge capital hole. It did not." He added that these arguments "were used by many to undermine Lehman's bid for support on that fateful weekend of 12 September 2008."

Ben Bernanke, chairman of the Federal Reserve, also testified to the committee as did Mary Shapiro, the head of the Securities and Exchanges Commission and Treasury Secretary Timothy Geithner.

Mr Fuld said the regulators had been given all the access they needed in the months before Lehman's bankruptcy. "I am not aware that any data was ever withheld from them."

Start your day with The Independent, sign up for daily news emails
PROMOTED VIDEO
News
ebooksNow available in paperback
Life and Style
tech
News
The 67P/CG comet as seen from the Philae lander
scienceThe most important scientific breakthroughs of 2014
Arts and Entertainment
Ian McKellen as Gandalf in The Hobbit: The Battle Of The Five Armies
film
Arts and Entertainment
Sarah Koenig, creator of popular podcast Serial, which is to be broadcast by the BBC
tvReview: The secret to the programme's success is that it allows its audience to play detective
News
Ruby Wax has previously written about her mental health problems in her book Sane New World
people
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Ashdown Group: Marketing Services Manager - (communications, testing, DM)

£32000 - £35000 per annum + benefits: Ashdown Group: Marketing Services Manage...

Guru Careers: Finance Account Manager

£Neg. (DOE) + Excellent Benefits: Guru Careers: A Finance Account Manager with...

Ashdown Group: Java Developer - Hertfordshire - £47,000 + bonus + benefits

£40000 - £470000 per annum + bonus: Ashdown Group: Java Developer / J2EE Devel...

Ashdown Group: Direct Marketing Manager - B2C, Financial Services - Slough

£45000 - £55000 per annum + Benefits: Ashdown Group: An exciting opportunity h...

Day In a Page

Homeless Veterans appeal: 'You look for someone who's an inspiration and try to be like them'

Homeless Veterans appeal

In 2010, Sgt Gary Jamieson stepped on an IED in Afghanistan and lost his legs and an arm. He reveals what, and who, helped him to make a remarkable recovery
Could cannabis oil reverse the effects of cancer?

Could cannabis oil reverse effects of cancer?

As a film following six patients receiving the controversial treatment is released, Kate Hilpern uncovers a very slippery issue
The Interview movie review: You can't see Seth Rogen and James Franco's Kim Jong Un assassination film, but you can read about it here

The Interview movie review

You can't see Seth Rogen and James Franco's Kim Jong Un assassination film, but you can read about it here
Serial mania has propelled podcasts into the cultural mainstream

How podcasts became mainstream

People have consumed gripping armchair investigation Serial with a relish typically reserved for box-set binges
Jesus Christ has become an unlikely pin-up for hipster marketing companies

Jesus Christ has become an unlikely pin-up

Kevin Lee Light, aka "Jesus", is the newest client of creative agency Mother while rival agency Anomaly has launched Sexy Jesus, depicting the Messiah in a series of Athena-style poses
Rosetta space mission voted most important scientific breakthrough of 2014

A memorable year for science – if not for mice

The most important scientific breakthroughs of 2014
Christmas cocktails to make you merry: From eggnog to Brown Betty and Rum Bumpo

Christmas cocktails to make you merry

Mulled wine is an essential seasonal treat. But now drinkers are rediscovering other traditional festive tipples. Angela Clutton raises a glass to Christmas cocktails
5 best activity trackers

Fitness technology: 5 best activity trackers

Up the ante in your regimen and change the habits of a lifetime with this wearable tech
Paul Scholes column: It's a little-known fact, but I have played one of the seven dwarves

Paul Scholes column

It's a little-known fact, but I have played one of the seven dwarves
Fifa's travelling circus once again steals limelight from real stars

Fifa's travelling circus once again steals limelight from real stars

Club World Cup kicked into the long grass by the continued farce surrounding Blatter, Garcia, Russia and Qatar
Frank Warren column: 2014 – boxing is back and winning new fans

Frank Warren: Boxing is back and winning new fans

2014 proves it's now one of sport's biggest hitters again
Jeb Bush vs Hillary Clinton: The power dynamics of the two first families

Jeb Bush vs Hillary Clinton

Karen Tumulty explores the power dynamics of the two first families
Stockholm is rivalling Silicon Valley with a hotbed of technology start-ups

Stockholm is rivalling Silicon Valley

The Swedish capital is home to two of the most popular video games in the world, as well as thousands of technology start-ups worth hundreds of millions of pounds – and it's all happened since 2009
Did Japanese workers really get their symbols mixed up and display Santa on a crucifix?

Crucified Santa: Urban myth refuses to die

The story goes that Japanese store workers created a life-size effigy of a smiling "Father Kurisumasu" attached to a facsimile of Our Lord's final instrument of torture
Jennifer Saunders and Kate Moss join David Walliams on set for TV adaptation of The Boy in the Dress

The Boy in the Dress: On set with the stars

Walliams' story about a boy who goes to school in a dress will be shown this Christmas