Occupational hazard

1 September 2010 By Richard Beales Follow @richardbeales1

Blaming Lehman s demise on the lack of a bailout neglects years of hubris. It was Fuld s job to watch his firm s back. But his charge that regulators were damagingly inconsistent is fair. The U.S. crisis commission should get to the bottom of why and how to avoid it next time.

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In written testimony before his Sept. 1 appearance before the U.S. Financial Crisis Inquiry Commission, former Lehman Brothers boss Dick Fuld said that Lehman's demise was caused by uncontrollable market forces and the incorrect perception and accompanying rumors that Lehman did not have sufficient capital to support its investments.

While conceding some mistakes, Fuld said they had been addressed and that there was nothing about Lehman's resulting profile indicative of a bankrupt company. He suggested Lehman had been singled out: Other firms were hurt by their plummeting stock prices and widening CDS spreads. But Lehman was the only firm that was mandated by government regulators to file for bankruptcy. The government then was forced to intervene to protect those other firms and the entire financial system.

Harvey Miller, a lawyer at Lehman's longtime adviser Weil, Gotshal & Manges, noted in his written testimony that it is reasonable to question the decision of the government to abandon the notion of any conceivable assistance or support for Lehman …

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