Lehman chief Fuld will deny knowledge of repo ‘gimmicks’
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Former Lehman Brothers chief executive Dick Fuld will today deny that he knew anything about the questionable accounting techniques recently uncovered that helped hide billions of dollars of debt.
According to reports, Fuld will tell the US House of Representatives financial sevices committee that he knew nothing of “repo 105”, an accounting practice that allowed the bankrupt investment bank to hide its most toxic assets from the world.
The reports quote him to say he had “absolutely no recollection whatsoever of hearing anything about repo 105 transactions while I was CEO of Lehman”. He will argue that his firm always acted within accounting rules.
Last month the bankruptcy examiner, Anton Valukas revealed evidence to show that Lehman Brothers had adopted accounting “gimmicks” which allowed it to move some of its worst performing assets off balance sheet in exchange for short-term capital, which allowed them to falsely report themselves as solvent.
Fuld will also tell the hearing that the bank was not in massive debt when it went bust but will argue that it had at least $26bn (£16.9bn) in capital.
US Federal Reserve chairman Ben Bernanke will tell the committee that the failure of Lehman Brothers was unavoidable.
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