Lehman Brothers collapsed due to “uncontrollable market forces”, former-CEO claims

2 September 2010

Lehman Brothers collapsed during September 2008 because of “uncontrollable market forces”, the ailing bank’s former chief executive has claimed.

Dick Fuld made the comments while being questioned over the collapse of the financial institution by the Financial Crisis Inquiry Commission (FCIC).

As part of a statement to the commission, which has been set up to investigate reasons behind the global credit crisis, the former banking executive admitted that Lehman Brothers had made some “poorly timed” investments.

However, he lay the blame for its collapse at the feet of financial industry regulators who failed to provide it with the same access to fiscal stimulus as other institutions.

Mr Fuld said: “Lehman's demise was caused by uncontrollable market forces and the incorrect perception and accompanying rumours that Lehman did not have sufficient capital to support its investments.

“All of this resulted in a loss of confidence, which then undermined the firm's strength and soundness. Those same forces threatened the stability of other banks - not just Lehman.”

In his prepared testimony to the FCIC, the former CEO also claimed that Lehman Brothers had been forced into declaring itself bankrupt.

Lehman Brothers took this step in September 2008.

By Jim Ottewill

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