Fuld blames Federal Reserve for Lehman collapse

Former Lehman Brothers boss Dick Fuld delivered a defiant defence of his management of the defunct Wall Street bank today, telling an official inquiry that the firm's 2008 bankruptcy was down to false rumours about a solvency crisis, uncontrollable market forces and a refusal by the US government to come to the rescue.

Appearing in front of the bipartisan US Financial Crisis Inquiry Commission in Washington, Fuld was only willing to accept very limited blame for the implosion of the bank, which sent financial markets into the worst global panic since the second world war.

"I clearly made mistakes," said Fuld, conceding that Lehman had too many illiquid assets, such as commercial property, on its books, and insufficient capital. But he said these issues were addressed before bankruptcy as the bank raised $3.8bn in equity capital and "de-risked" by shedding 50% of its less saleable investments.

"Did we do everything right? We clearly did not," said Fuld. "I myself did not see the depth and violence of the crisis. I did not see the contagion. I believe we made poor judgments in timing for the assets we bought and for the businesses we supported. Would I love today to be able to reach back and [re]take those? Yes."

However, Fuld told the panel, he would have needed a "crystal ball" to take more radical action – such as pulling Lehman out of the troublesome mortgage market earlier. And he repeatedly shifted blame onto the US government, insisting that the Federal Reserve refused to allow Lehman access to its "discount window" that provided cheap capital to Wall Street.

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