Richard Fuld: Multi-Millionaire Whiner

Richard Fuld, who was CEO of Lehman Brothers when it went bankrupt in 2008, blames federal regulators for not rescuing his firm, which pushed it into bankruptcy. Since when is it the government’s job to save firms from their own mistakes and keep them out of bankruptcy?

Fuld accurately notes that the federal government did save several firms from bankruptcy, including some of Lehman’s competitors. But the right question is: Shouldn’t the federal government have let those firms go bankrupt too, rather than arguing Lehman should have been saved from bankruptcy? Thousands of firms went bankrupt in the past two years, including hundreds of banks.

The only reason Fuld gives (in this article, anyway) why Lehman should have been rescued is that some other firms were. But firms that went bankrupt far outnumbered those that were rescued. The firms that were rescued were, the argument goes, too big to fail. Lehman Brothers obviously was not too big to fail, because it failed.

It’s hard to have too much sympathy for Fuld, because even as he led his firm to bankruptcy, he personally received more than half a billion dollars in compensation from the firm. His personal return was pretty good, even though the risks he took to get that return bankrupted his firm.

I do think politics played a big part in who got rescued and who didn’t, but that’s always the nature of government. Every government action is political. If Lehman had the same government connections Goldman Sachs did, the outcome would have been different. Still, how much sympathy can you have for someone who got half a billion dollars out of a company before leading it to bankruptcy?

Randall G. Holcombe is a Senior Fellow at the Independent Institute, the DeVoe Moore Professor of Economics at Florida State University, and author of the Independent Institute book Liberty in Peril: Democracy and Power in American History.
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