The Washington, D.C. political vultures who have been circling the corpse of Lehman Brothers descended on it today and began picking at the remains. It happened in the Rayburn House Office Building this morning, when members of Henry Waxman’s (D-CA) Committee on Oversight and Government Reform grilled Richard Fuld. Fuld is the former Chairman and CEO of Lehman Brothers, the now-defunct Wall Street investment firm.
The usage of the phrase ‘Oversight and Government Reform’ in the name of Waxman’s Committee is one of the best examples of the noun ‘oxymoron’ that I can think of. Waxman’s committee has enforced absolutely no effective oversight, nor has it proposed any significant reforms having to do with the economic meltdown and resulting panic gripping U.S. and international markets. Nada!
But these politicians need cover, and that means beating the bushes for fall guys. It’s easy to do these days. One of Waxman’s first targets today was Lehman’s Richard Fuld. I’m no fan of this man, because a unit of his firm was up to its eyeballs in risky financial derivatives – a primary cause of the fiscal crisis.
That was not the only cause. Another major factor was the failure of Congress to implement and to enforce reasonable regulations for mortgage guidelines designed to protect vulnerable borrowers. No one in Congress wants to hear this now, but the Legislative Branch in D.C. is one of the key irresponsible participants for having actively stimulated the writing of loans to people who had no decent chance of repaying them.
Fuld, in response to a question about how the fiscal fiasco occurred, had the guts to push back on Waxman’s committee and to say, “A goal of the government was to provide funding to people who could not or would not pay their mortgages.” That’s an incontrovertible fact.
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