Newspaper article International New York Times

Former Lehman Chief Breaks a Long Silence ; Fuld, Vilified for His Role in Bank Crisis, Speaks on Love, Putin and 'Rocky'

Newspaper article International New York Times

Former Lehman Chief Breaks a Long Silence ; Fuld, Vilified for His Role in Bank Crisis, Speaks on Love, Putin and 'Rocky'

Article excerpt

In his first public appearance since 2008, Richard Fuld mused about the economy, the Middle East, love and life but danced around his firm's fall.

After nearly seven years of public silence, Richard S. Fuld Jr., the former chief executive of Lehman Brothers, had a lot to say.

In a rambling speech at the Marcum MicroCap Conference at the Grand Hyatt New York in Midtown Manhattan -- his first public appearance since the financial crisis -- Mr. Fuld offered an opinion about the Islamic State, fretted about Vladimir V. Putin and proposed that the economy was not nearly as healthy as the stock markets might suggest.

But while Mr. Fuld, known as "the Gorilla" of Wall Street for his brusque style, was eager to share his views about the world, he assiduously avoided talking about his role in the largest bankruptcy in United States history.

Instead, he offered insights into his views on personal topics, including love and death, and made frequent references to his resilience.

"What did Sigmund Freud say? 'You can say whatever you want about me. I'm O.K. because I know my mother loves me,"' he said to a crowd of 1,300 financial professionals. "And my mother still loves me. She's 96."

At another moment, Mr. Fuld offered a boxing analogy: "What did Rocky say? 'It's not how hard you hit but whether you get up after you've been knocked down.' I love Rocky."

Mr. Fuld was vilified during the crisis, becoming the face of Wall Street's excess and imprudence. However, he was unapologetic on Thursday, suggesting that Lehman could have survived if the Federal Reserve had allowed it to, and deflected blame for the crisis onto policy makers instead of bankers.

He appeared anxious at first, removing his jacket at the podium. "I haven't done this in a while," he said. "This is my first public event since '08. I don't include my wonderful time with Congress."

Explaining the origins of the financial crisis, Mr. Fuld avoided any mention of investment banks' eagerness to issue subprime mortgages. (Lehman had an enormous portfolio of subprime loans.)

"It's not just one single thing," Mr. Fuld said. "It's all these things taken together. I refer to it as the perfect storm."

At the root of the crisis, in his view, was the government's push for homeownership. At the same time, hedge funds, private equity firms and sovereign wealth firms grew rapidly, supercharging the global financial system and driving up equity values, balance sheets, the volume of financial products and the need for financing, he said.

"There was very little regulation or market supervision," Mr. Fuld said.

Then in 2007, the Fed raised interest rates, essentially ending the housing boom it had encouraged, Mr. Fuld said.

"The increased rates led to increased mortgage rates and payments, a huge number of residential foreclosures," he said. "Banks wrote down and sold assets."

In the wake of this, companies began cutting costs and jobs, Mr. Fuld said, and it became "a self-fulfilling economic loop."

"The rest is history," he added.

Mr. Fuld believes that the current economy is not as healthy as it appears. …

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