The Gall of the Greedy

Even as Lehman Brothers sought a federal bailout to keep the investment bank out of bankruptcy court, the Wall Street firm signed off on millions of dollars in bonuses for executives on the way out the door, a congressional panel learned on Monday. The House Oversight and Governmental Reform Committee unearthed documents, including one showing that four days before filing for bankruptcy the firm's compensation committee was asked to dole out $20 million in "special payments" for three departing

Even as Lehman Brothers sought a federal bailout to keep the investment bank out of bankruptcy court, the Wall Street firm signed off on millions of dollars in bonuses for executives on the way out the door, a congressional panel learned on Monday. The House Oversight and Governmental Reform Committee unearthed documents, including one showing that four days before filing for bankruptcy the firm's compensation committee was asked to dole out $20 million in "special payments" for three departing executives.

Another document showed that last January, when executives were warned that the company faced serious problems, it still shelled out $5 billion in bonuses.

Those inside the firm who dared to suggest a little financial humility in light of what was happening to Lehman investments were mocked.

An internal e-mail last June suggested "top management should forego bonuses this year" in order to "send a strong message to both employees and investors that management is not shirking accountability for recent performance." The dismissive response the same day from a senior executive: "I'm not sure what's in the water."

Among those testifying Monday before the House committee was Richard Fuld Jr., chairman and chief executive of Lehman Brothers Holdings Inc. Poor Mr. Fuld and his wife, The Wall Street Journal recently reported, have begun to sell off some of their art collection. Not to worry. "Fuld and his wife still have a sizable art collection and a primary residence in Greenwich, Conn., featuring an indoor squash court. They also own a $21 million Park Avenue co-op, a home in Vermont and another one in Sun Valley, Idaho. In addition, Mr. Fuld in 2004 paid $13.75 million for an oceanfront house in Jupiter Island, Fla."

Lehman filed for bankruptcy protection on September 15, leaving three major investment banks. Since then, Merrill Lynch was taken over by Bank of America, and Goldman Sachs and Morgan Stanley announced they would become commercial banks.

To read the Lehman Brothers e-mails, click here.

To read The Wall Street Journal online article about the Fuld fortune, click here.

To read more about the House hearing, click here.