Former Lehman CEO testifies to House
TEXT OF INTERVIEW
Steve Chiotakis: Congress is trying to get to the bottom of why Lehman Brothers crashed and burned. It's former CEO, Dick Fuld, is telling the House Financial Services Committee: don't hate the player, hate the game. They're also taking a look at the Securities and Exchange Commission, which is appearing today as well. We're going to check in with Marketplace's Gregory Warner, who is with us live to sort through the blame game. Good morning, Gregory.
Gregory Warner: Good morning, Steve.
Chiotakis: So why is Dick Fuld testifying today on the Hill?
Warner: Well in the months leading up to the collapse of Lehman Brothers, the firm used an accounting trick called Repo 105. And according to a court-appointed examiner, this allowed the firm to make it seem to auditors like they had $50 billion less debt than they did. So when the collapse did come, it was even worse. Here's Anna Eshoo, a Democrat from California:
ANNA ESHOO: This behavior exemplifies Wall Street's reckless behavior, which brought our economy to the brink of ruin.
But the SEC regulators were also blamed for not doing their job. Here's Republican Spencer Bachus from Alabama:
SPENCER BACHUS: Fact not only did they not do their job, in cases they actively failed to share with the American people the information they had.
Chiotakis: Hey Gregory, what's really happening here, I mean besides the standard Washington blame game?
Warner: Well ultimately for Mr. Fuld and other Lehman executives, the question is whether they'll be charged with a criminal or civil suit. The other issue is whether Wall Street will get more regulation. Not surprisingly, Dick Fuld in his prepared statement says don't blame Lehman, blame the rules. He says what Wall Street needs is more transparent accounting rules. I guess that's where Dick Fuld and President Obama have something to agree on.
Chiotakis: Marketplace's Gregory Warner, with us live this morning. Gregory, thanks.
Warner: My pleasure.