WASHINGTON — Richard Fuld, the former chief executive of failed investment bank Lehman Brothers, said the bank might have survived if financial regulators had made different decisions, in prepared testimony for a hearing Wednesday.
Fuld said that the same "uncontrollable market forces" that led to Lehman's demise threatened the stability of other banks. "But Lehman was the only firm that was mandated by government regulators to file for bankruptcy. The government then was forced to intervene to protect those other firms and the entire financial system," Fuld said in his prepared remarks to the Financial Crisis Inquiry Commission, a congressionally created panel charged with investigating the causes of the financial crisis.
Fuld said he believes that had the Federal Reserve opened its financing window to investment banks before the near-collapse of Bear Stearns, "that decision might have provided the necessary liquidity to keep Bear Stearns operational and, more importantly, might have lessened the need for additional government intervention."
He also faulted U.S. regulators for refusing to grant Lehman the same expanded access to its Primary Dealer Credit Facility, a move the Fed made on the same Sunday that officials told Lehman it must file for bankruptcy.
"Only Lehman was denied that expanded access. I submit, that had Lehman been granted that same access as its competitors, even as late as that Sunday evening, Lehman would have had time for at least an orderly wind down or for an acquisition which would have alleviated the crisis that ensued," he said.