Excessive risks, not regulators, doomed Lehman Brothers

Saturday, September 4, 2010

To this day, Richard S. Fuld believes that he had no culpability in the collapse of Lehman Brothers ["Lehman 'was forced into bankruptcy' by regulators, former CEO testifies," news story, Sept. 2]. Forced into bankruptcy, indeed.

Mr. Fuld sounds like my 5-year-old daughter blaming me when her ice cream falls off the cone onto the ground. Companies aren't forced into bankruptcy anymore than the aforementioned ice cream is forced onto the ground. The reality is that, on Mr. Fuld's watch, Lehman took excessive risks in underwriting, investing in and foisting garbage mortgage-backed collateralized debt obligations on the investing public. He led his firm into bankruptcy with eyes, and bank accounts, wide open and is now trying to cast the blame on government. The only blame the government has is that it didn't regulate Lehman more stringently.

The sad irony is that if the government had done its job correctly, Mr. Fuld would now be whining that onerous government regulation has prevented Lehman from properly allocating capital, thus slowing economic expansion and costing U.S. jobs.

Steve Pattison, Alexandria


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