CONGRESSIONAL HEARINGS into the financial crisis have established that top executives at Lehman Brothers rejected calls to give up their bonuses just three months before the firm was forced into bankruptcy.
Internal Lehman e-mails seen by the congressional committee relate how management at Neuberger Berman, a Lehman subsidiary, suggested that top executives forgo bonuses to make a "significant expense reduction" and to "send a strong message to both employees and investors that management is not shirking responsibility for recent performance".
It provoked a dismissive response from George H Walker, a top Lehman executive and a cousin of US president George Bush.
"Sorry, team," he said in a letter to the executive committee. "I'm not sure what's in the water at 605 Third Avenue today . . . I'm embarrassed and I apologise."
Congressional committee chairman Henry Waxman said Lehman chief executive Dick Fuld also "mocked" the suggestion.
"Don't worry," Mr Fuld told Mr Walker. "They are only people who think about their own pockets."
Mr Fuld has attracted much ire for his role in the downfall of the venerable 158-year-old investment bank. Vanity Fair journalist Vicki Ward this week told CNBC that "two very senior sources" confirmed to her that Mr Fuld was attacked in the gym by an angry employee shortly after the bank declared bankruptcy. "He was on a treadmill with a heart monitor on. Someone was in the corner, pumping iron, and he walked over and he knocked him out cold."
After watching Mr Fuld's "shameless" testimony to Congress this week, Ward said she would "have done the same . . . He blamed everybody but himself."
An unapologetic Mr Fuld had earlier told Capitol Hill his actions were "prudent and appropriate", blaming short-sellers and the US government for Lehman's failure.
He said he would wonder "until they put me in the ground" why the firm was not rescued by the government.
While Mr Fuld's pay package continues to generate outrage in the US - he received a $22 million (€16 million) bonus in March - his earnings are dwarfed by others on Wall Street.
Former Merrill Lynch chief executive Stanley O'Neal collected $161 million after being forced to walk the plank in the wake of massive subprime-related writedowns, while former Citigroup chief executive Chuck Prince received a $68 million payout after being shown the door.
If Lehman resembles other Wall Street firms in its penchant for generous compensation payouts, it also shares a tendency to be economical with the truth, if a Wall Street Journal report is to be believed.
The newspaper this week reported Lehman executives calculated they needed at least $3 billion in fresh capital on September 9th - one day before they told investors on a conference call that the bank needed no capital.
The paper also cites Wall Street executives as saying Lehman had overvalued its property portfolio by more than $10 billion. Hedge fund clients were assured the bank's finances were solid even as they "began yanking money from Lehman", the paper reports.
The story carries echoes of the dying days of Bear Stearns, which assured investors there was "absolutely no truth to the rumours of liquidity problems" just days before the firm collapsed last March.
Lack of trust between financial institutions has resulted in the virtual freezing of credit markets, as banks grow increasingly doubtful of each other's financial credentials.
