Tuesday, April 20, 2010

Dick Fuld Gives the Sergeant Schultz Defense

Dick Fuld of Lehman Brothers is appearing before the House Financial Services Committee today, and his prepared testimony is already online. It's a riot. Fuld is giving the famous "Sergeant Schultz defense."

Repo 105? What Repo 105? He saw nothing! He heard nothing! Oh, and he also throws in the "Alzheimer's defense." He doesn't remember!

Meanwhile a former Leman exec named Matthew Lee -- his prepared testimony is here -- will be sitting at the same panel as his former boss, ready to put the lie to Fuld's excuses.

According to his prepared testimony, Lee raised concerns about Repo 105 with senior management, the Audit Committee of the board of directors, and its outside auditors at Ernst & Young. Within days of raising these concerns, he was canned.

It will be interesting to see what emerges at the hearing today. Stay tuned.

UPDATE: After hours of pabulum from Timothy Geithner, Mary Schapiro and Ben Bernanke, finally Fuld slimed his way into view -- not sworn in, for some reason, which is a shame, because this guy lies like a Persian rug. Asked why Lehman failed, Fuld blithered and blathered and talked out the clock.

The star was William Black, former litigation director of the Federal Home Lome Bank Board, speaking forthrightly about what needs to be done: Lehman needs to be charged with fraud.

Then came more questioning of Fuld, again blithering and blathering and evading even the most simple questions.

"Let me try to put this in some context," he would say, before launching into a filibuster--and these morons would let him.

Watching that gekko Fuld running rings around the committee, being allowed to evade and stonewall, it's easy to understand why we're in the mess we're in.

I'm sorry I titled this "Fuld Gives the Sergeant Schultz Defense." I should have made it, "Fuld Gives Congress the Finger."

UPDATE, 5:07 p.m.: The questioning is continuing, as do the evasions, the lies, the squirming. There was something vaguely familiar about Fuld's appearance today.

I couldn't quite put my finger on it, and then I remembered what Fuld's performance resembled: Frank Costello's famously evasive appearance before the Kefauver Committee.

I mean, the man can't even tell the truth about his No. 1 critic, David Einhorn, whose name came up toward the end of the hearing. Fuld was obsessed with shorts and particularly Einhorn, and Fuld today can't even tell the truth about Einhorn, bearly acknowledging his existence--or that he was right.

What a douchebag.

Lehman bankruptcy examiner Anton Valukas testified that Fuld's pants were on fire: “A fact-finder concluded that he [Fuld] in fact did know and acted upon information he knew or should have known. There was at least one witness who testified that he discussed Repo 105 transactions with him and that there were document sent to him by e-mail and otherwise, which reflected the Repo 105 transactions.”

© 2010 Gary Weiss. All rights reserved.

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