Daily Flog: Fuld shares his unbelievable pain with Congress

By Ward Harkavy, Tuesday, Oct. 7 2008 @ 9:22AM

Categories: Bidness, COLLATERAL DAMAGE, FINANCIOPATH, Featured, LOOTING (BY CORPORATIONS), McClatchy D.C. Bureau, Morning Reports, Wall Street Journal

Disgraced CEO Dick Fuld lied before Congress yesterday when he denied selling shares of Lehman.

I pointed out in yesterday's Daily Flog, "Celebrity Roast of Lehman on Capitol Hill," just before the Waxman Committee grilling of Fuld, that he got $52.9 million in proceeds in only two days of market play in 2007 — while Lehman was publicly assuring its other shareholders that everything was fine. (See a list of his transactions here and my post yesterday afternoon about Fuld here.)

Nevertheless, he told the committee yesterday that he had such unshakeable faith in his company that "I never sold my shares."

Never? Only in Neverland.

The best account of the hearing comes from the blogging of the Wall Street Journal's Heidi N. Moore. Doing a brilliant job in real-time, Moore managed to excoriate both Fuld and several Congress members. Actually, she didn't excoriate them — they did it to themselves and she merely reported it.

In a witty, breezy account that gives a good glimpse of the bloviating at such hearings, she was eminently fair to Fuld. For example, here's the key passage about Fuld and his Lehman stock:

2:18: Questions about compensation and whether it’s fair. Fuld gets really warmed up here. "I’m not proud that I lost all that money . . . but my point is, that the [compensation] system worked . . . .I received 85 percent of my compensation in stock. All the stock that I got, for the last five years, I lost that. Compensation that I received back to '97, '98 and '99, I could have gotten it seven years ago. But I went to the compensation committee and extended it to a 10-year [vesting period]. I lost all of that." He goes on, "I got no severance, no golden parachute. I got no contract. I never asked for a contract. I never sold my shares, and that’s why I had 10 million left. I believed in this company. I could have sold that stock. But I did not, because I believed we would return to profitability." This is a crucial moment because it humanizes him in front of the questioners.

We'll see about those golden parachutes and severance. As for his courageously hanging on to his Lehman stock, Fuld could argue that he was talking yesterday about his not selling his shares this summer, when Lehman's meltdown was truly imminent.

But Lehman knew last year that it was in trouble while it was exuding confidence publicly, and in any case its share price was on a long decline even back then.

So Fuld's sell-off of a million shares — yes, a million — of Lehman on June 13, 2007, and November 30, 2007 — when it was trading in the range of $62 to $78 a share, compared with its current value of 1.5 cents a share — does seem to slightly contradict his "I never sold my shares" statement.

OK, Fuld is a whipping boy for Great Depression II, just another of those convenient, symbolic characters who's easy to blame.

That doesn't mean he doesn't deserve to be whipped.

Meanwhile, the recklessness of Fuld and other Wall Streeters is beating us like we were red-headed stepchildren. Nobody covers us commoners like McClatchy. Check out its "fallout" package.

Start clicking . . .

NO PARTICULAR ORDER:

McClatchy: 'Dow closes at 4-year low as crisis mood sweeps the world'

Washington Post: 'Unfolding Worldwide Turmoil Could Reverse Years of Prosperity'

BBC: 'Shoppers killed by Somali shells'

Wall Street Journal: 'Investors Succumb to Fears of Recession'

Washington Post: 'A Quarter of Mammals At Risk for Extinction'

N.Y. Post: 'INVESTMENT PROS WHISPER BOTTOM IS NEAR'

Waxman Committee: The Dick Fuld Show (video)

Wall Street Journal: 'Congress Grills Lehman Brothers’s Dick Fuld: Highlights of the Hearing' (Heidi N. Moore's blog of the hearing)

Wall Street Journal: 'Lawmakers Lay Into Lehman CEO'

Bloomberg: 'Fuld Targeted by Lawmakers as Surrogate for Wall Street Excess'