Lehman Brothers, whose collapse worsened the global financial crisis in late 2008, slumped into bankruptcy as the entity failed to get the necessary support from the US authorities, former chief Richard S Fuld has said.
The fall of Lehman in September, 2008, which pushed global markets into a free-fall, was a watershed moment in what was billed as one of worst financial meltdowns since the 1930s.
"Lehman was forced into bankruptcy... because of a decision, based on flawed information, not to provide Lehman with the support given to each of its competitors and other non-financial firms in the ensuing days," Fuld said in a testimony before the US Financial Crisis Inquiry Commission.
The ten-member panel appointed by the US Congress is mandated to look into the reasons for the financial crisis in 2008-09. Lehman had filed for bankruptcy on September 15, 2008.
In his testimony on Wednesday, Fuld said that on September 14, 2008, the Federal Reserve expanded the types of collaterals that could be used by investment banks for borrowing money. However, he pointed out the expanded access was not available for Lehman.
"... Had Lehman been granted that same access as its competitors, even as late as that Sunday evening (September 14), 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.
Fuld, who had faced brickbats for the problems at Lehman, was the chairman and CEO for 14 years before the entity collapsed.
According to him, Lehman's demise was due to uncontrollable market forces, as well as an incorrect perception and accompanying rumours that the entity did not have sufficient capital to support its investments.
