now is Wall Street can bring down Main
Street and frankly I'm going to tell you
scary companies now bankrupt our economy
is in a state of crisis did you mislead
your investors and I remind you sir
you're under oath your testimony today
right here right now people want to know
if you defraud you don't seem to
acknowledge that you did anything wrong
you know we talk about what happened at
Lehman and we talk about who's fault
why wasn't I on it my employees my
shareholders creditors clients have
taken a huge amount of pain
I wake up every single night thinking
what could I have done differently this
is a pain that will stay with me for the
rest of my life
[Music]
for 14 years he was the man in charge of
the nation's fourth largest investment
bank Lehman Brothers not only was he the
longest-serving CEO on Wall Street Dick
Fuld was also considered one of its
toughest but his business once worth
more than 45 billion dollars went bust
on a September weekend in 2008 this is
the story of the largest bankruptcy in
US history and a chapter that changed
our country it led to an age of populism
a deep distrust of Wall Street and a
near meltdown of the global economy not
in generations as Wall Street absorbed
the number of body blows it took today
the American financial system is rocked
to its foundation as top Wall Street
institutions topple under a mountain of
debt when you step back for just a
moment consider the events of the last
few days it is truly unbelievable
the roots of the crisis can be traced
back years earlier when the number of
risky subprime mortgages skyrocketed
when housing prices fell and higher
interest rates kick in
homeowners couldn't keep up with their
payments foreclosures are rising and the
biggest problem is that prices continue
to drop and tell home prices stop
falling things just aren't gonna get any
better by the end of 2007 at least a
hundred mortgage companies declared
bankruptcy or were sold and then the
crisis spread to one of Wall Street's
biggest and most respected firms not
since the Great Depression as the
federal government stepped in to help a
failing financial institution in this
country the way they did over this past
weekend panic selling has brought bear
stearns an investment bank to its knees
JP Morgan Chase buys the firm but only
after the government loans 30 billion
dollars to buy up bears most toxic
assets the Federal Reserve has moved
quickly to bring order to the financial
markets secretary Paulson is supportive
of that action the man at the center of
it all Treasury Secretary Henry Paulson
knows he has dodged a bullet
after Bear Stearns what did you think
was going to happen did you think it was
over oh oh no what hit us big time all
of us was WOW if an investment bank gets
hit by a run in the middle of a panic we
don't have the authorities in the United
States government to save them unless
what there's a buyer within hours of the
rescue of Bear Stearns all eyes turned
to the next giant that might fall Lehman
Brothers Lehman's books are loaded with
troubled subprime mortgages
had 60 calls with Dick Fuld from the
time Bear Sterns went down itself women
failed I said but you should be doing is
you should be raising capital and you
should be looking for a cornerstone
strategic investor or working to sell
the business and what did he tell you
well he's an optimist so he basically
said I've got plenty of capital we don't
have a significant risk but Lehman's
falling stock price is telling a
different story
financials big beating Lehman down
almost 20 percent in just a few months
Lehman has lost nearly half its value
Fuld is enraged and blames lows betting
against his company the short sellers
I'm soft I'm lovable but what I really
want to do is I want to reach in rip out
their heart and eat it before they die