Lehmans failed boss pockets $480m

A swedish politician is calling for criminal charges against reckless bankers.

He said laws should be introduced in the US and Europe making it a criminal offence for bankers to lend irresponsibly. He also proposed that banks should be made subject to legally-binding guidelines on lending. Lündgren was Sweden’s finance minister in the early 1990s when a property slump put the economy into recession.

“In the US, the bail-out’s condition on capping executive pay is for show,” he said. “Legislation should be introduced so that if any bank is lending recklessly, executives could be punished by criminal law or be forced to pay damages.”

Guardian, 7 October 2008

Meanwhile in the US the failed boss of Lehman Brothers was cross-examined by the Chairman of the House oversight committee over his $480m remuneration.  

A lifelong Lehman employee who joined the firm as an intern in 1966, Fuld has been blamed for the debacle by many of the bank’s 28,000 staff – including those in London who have accused senior management of filleting Lehman’s British operation of money in the bank’s final days.

Deadpan and emotionless, Fuld repeatedly frustrated congressmen by answering questions with lengthy, technical financial explanations. 

Guardian, 7 October 2008

I can’t help but feel that this is a bit of a show trial and that no action will be taken.  In one respect, if nothing illegal was done then it seems rather churlish to retrospectively criminalise bankers’ activities.  We ought to be preventing it from happening again but first we really need to uncover the root causes of this behaviour and that goes much deeper than the greedy bankers.

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