Tell Me this don't get the Blood Boiling...
 

And they kept taking and taking even while they were asking for help....:wall:...these guys belong in jail

Congress opens hearings on financial meltdown
By JULIE HIRSCHFELD DAVIS, Associated Press Writer

WASHINGTON - Days from becoming the largest bankruptcy in U.S. history, Lehman Brothers steered millions to departing executives even while pleading for a federal rescue, Congress was told Monday.

As well, executives who feared for their bonuses in the company's last months were told not to worry, according to documents cited at a congressional hearing. One executive said he was embarrassed when employees suggested that Lehman executives forgo bonuses, and cracked: "I'm not sure what's in the water."

The first hearing into what caused the nation's financial markets to collapse last month, precipitating a $700 billion bailout, opened with finger-pointing and glimpses into internal company documents from Lehman's chaotic last hours.

Rep. Henry Waxman, D-Calif., chairman of the House Oversight and Government Reform Committee, said the giant investment bank was "a company in which there was no accountability for failure." Lehman's collapse set off a panic that within days had President Bush and Treasury Secretary Henry Paulson asking Congress to pass the rescue plan for the financial sector.

Richard S. Fuld Jr., chief executive officer of Lehman Brothers, declared to the committee "I take full responsibility for the decisions that I made and for the actions that I took." He defended his actions as "prudent and appropriate" based on information he had at the time.

"I feel horrible about what happened," he said.

Waxman questioned Fuld on whether it was true he took home some $480 million in compensation since 2000, and asked: "Is that fair?"

Fuld took off his glasses, held them, and looked uncomfortable. He said his compensation was not quite that much.

"We had a compensation committee that spent a tremendous amount of time making sure that the interests of the executives and the employees were aligned with shareholders," he said. Fuld said he took home over $300 million in those years — some $60 million in cash compensation.

Waxman read excerpts from Lehman documents in which a recommendation that top management should forgo bonuses was apparently brushed aside. He also cited a Sept. 11 request to Lehman's compensation board that three executives leaving the company be given $20 million in "special payments."

"In other words, even as Mr. Fuld was pleading with Secretary Paulson for a federal rescue, Lehman continued to squander millions on executive compensation," Waxman said before Fuld appeared as a witness.

The government let Lehman go under Sept. 15, only to bail out insurance giant American International Group the next day, in a cascading series of financial shocks and failures that put Washington on track for the multibillion-dollar rescue starting the end of that week.

Waxman described that plan as a life-support measure. "It may keep our economy from collapsing but it won't make it healthy again," he said.

That sentiment echoed on Wall Street, where the Dow Jones industrials sank below 10,000 on Monday for the first time in four years. Investors fear the crisis will weigh down the global economy and the bailout won't work quickly to loosen credit markets.

The rescue plan, now law, was so rushed that the usual congressional scrutiny is only coming now, after the fact.

"Although it comes too late to help Lehman Brothers, the so-called bailout program will have to make wrenching choices, picking winners and losers from a shattered and fragile economic landscape," said Rep. Tom Davis of Virginia, the committee's senior Republican.

Waxman said that in January, Fuld and his board were warned the company's "liquidity can disappear quite fast."

Despite that warning, he said, "Mr. Fuld depleted Lehman's capital reserves by over $10 billion through year-end bonuses, stock buybacks, and dividend payments."

Waxman quoted Fuld as saying in one document, "Don't worry" to the suggestion that executives go without bonuses.

That suggestion came from Lehman's money management subsidiary, Neuberger Berman. Waxman quoted George H. Walker, President Bush's cousin and a Lehman executive who oversaw some Neuberger Berman employees, as responding with a dismissive tone to the idea of going without bonuses.

"Sorry team," he wrote to the executive committee, according to Waxman. "I'm not sure what's in the water at 605 Third Avenue today.... I'm embarrassed and I apologize."

Rep. Elijah Cummings, D-Md., said: "I wonder how he sleeps at night."

Fuld said in his statement that the company did everything it could to limits its risks and save itself.

"In the end, despite all our efforts, we were overwhelmed, others were overwhelmed, and still other institutions would have been overwhelmed had the government not stepped in to save them," he said.

TDF.... I agree.... The government should recover and firesale the assets of these guys,,, They KNEW,,,,

f*cking Sickening.

"It's not my fault that you didn't stop me from stealing, it's your fault for not catching me."
Didn't Enron teach us anything about corporate greed and mismanagement?

I don't remember,,, lets ask Ken Lay,,,, oops,,, I know that was wrong but I could not resist.

they can share a cell with OJ

Banks May Say 'Thanks, But No Thanks' To That New $700 Billion
 

Last week, in that big post about the financial crisis, one thing I mentioned is that despite all the talk of "moral hazard" -- the bigger fear might be moral hazard's sister problem: adverse selection. That is, it would only be those with truly awful assets and no other options that would take the government up on its offer to buy its "toxic" assets. That may be happening. Reports are coming out that some on Wall Street are considering saying "thanks, but no thanks" to the new ~$700 billion that the Treasury Secretary has been given. The article paints the issue as being about the strings that come attached to it, such as limits on executive pay and golden parachutes. That almost certainly could be a part of the reasoning, but a much bigger part may simply be that these banks recognize that the assets they have aren't quite as toxic as they're being made out to be.
From Techdirt - http://techdirt.com/articles/20081005/2216172456.shtml

Yes, there are bundles of highly questionable mortgages, but contrary to what the media tells you, plenty of the people who possess those mortgages are still paying -- and even if they're not, the property and houses they represent still do have some value on the market -- or will someday. Thus, it may be that the only banks that really take up Paulson on a buyout offer, are those with really toxic assets that aren't likely to appreciate in value. That's not good for anyone. The more you look at this bailout, the worse it seems. It also makes you wonder why there isn't more of a focus on using a so-called "stock injection" plan, whereby the gov't becomes an investor in the banks, rather than just buying out certain questionable assets. That would, in theory, help avoid sticking the taxpayers with only the worst of the worst assets.

A good point, although I think one of the big issues is that since the risk hes been so obfuscated and distributed, there's a giant lack of confidence in the entire system.

I'm sure a large number of institutions has somewhat sound, and I don't have any problem with letting the weaker get absorbed by those with more conservative and prudent holdings.

I'm still worried about the potential for things to really spiral downhill, like we appear to be seeing.

-spence

1929 all over again

I think your "stock injection" comment above is likely to be reality very soon.

-spence

Leverage is the best way and get ownership in return

I agree, the CEO's should be raked over the coals and their bonus's and golden chutes returned to the employees.

In addition a full investigation should be done on why and who in Congress was against the 2003 and 2005 bills which would have tightened the banking regulations.

If there was personal gain for a no vote their feet should be held to the fire, no matter what the party.

Let the chips fall where they may.

http://www.guardian.co.uk/business/2...others.banking

MAKES ME WANT TO HURL ALL THE WAY FROM THE TIP OF MY LOWER INTESTINE. And they're gonna let these SCUMBAGS get away with it. I'm really starting to hate these FATCAT %$%$%$%$s

ok - gonna get creamed here.

I have no problem with the bonuses or salaries of the CEOs and returning them to the other employees or giving them to anyone is wrong. Why? Executives sign contracts, those contracts have negotiated terms and obviously compensation is a major part. Corporations have legal and compliance teams to ensure there is some check and balance to the business. Also, CEOs salaries are required to be disclosed and since they ultimatley report to shareholders, you can choose to sell your stock. So far, there have been questionable or risky business processes but nothing illegal. Also, Lehman is a big firm with different business lines, should the exec in charge of equity trading be penalized for someting he had nothing to do with? I am sure ALL of Lehmans employees are hired "at will" and can be disposed of at any time. Their salary is their business. Should we go back 5 yrs and reclaim any gain shareholders made on trading Lehmans stock?

The problem isn't that they got big bonuses when Times were good....the problem is they were still handing them out while they were filing for bankruptcy and asking the taxpayers to come bail them out....you don't see a problem with that.

Absolutely. It was an intentional rip off imho, and at the very least the monies should be returned to the employees who walked away with nothing.

So here's how it all boils down:
The exec's get a "golden parachute"
and everyone else gets a "golden shower".

I'd like a crystal ball that would tell me how many CEO's have stood on the public stage and misrepresented the position of their company to keep shareholders at bay while they cash out.

Even if they are never prosecuted for a crime, it's still unethical (at least in the sense of Plato's noble lie) and most if not mostly all are guilty at some time...you betch 'ya (wink).

-spence

:agree:

That's why they get the big bucks!!!