It’s a Bad Week to Be A Bailed-Out Executive

It sounds like the Congresscritters, having written out the mother of all checks, are now calling folks into the principal’s office.

First, Lehman Brothers was subjected to grilling (WSJ subscriber link):

Lehman Brothers Holdings Inc. agreed to pay a total of more than $23 million to three executives leaving the securities firm just days before it collapsed, according to internal emails made public by congressional investigators.

The disclosure came as a House committee grilled Lehman Chief Executive Richard Fuld Jr. and painted a picture of a financial firm that operated like a casino run by greedy executives. The lawmakers repeatedly asked Mr. Fuld whether he deceived investors about the health of his firm in its last week, and cited hefty borrowing, high pay and excessive risk-taking by Lehman over the past several years.[…]

In sometimes halting language, Mr. Fuld said that while he takes responsibility for decisions the firm made, he believes that Lehman was brought down by outside forces including lax oversight and "short sellers," traders who were betting Lehman’s stock price would fall.

Is it just me, or do I see a bit of the American cultural tendency to jump to blame others for things that might have been at least partially under your own control creeping into that last quoted paragraph.

Yesterday, it was AIG’s turn.  Quoting the New York Times’ DealBook:

Mr. Sullivan was criticized for his reassurances to investors about A.I.G.’s health in December despite warnings from company auditors that its exposure to those contracts was growing.

And many legislators berated the two men for large pay packages dispensed to top executives despite evidence that the company’s financial health had begun deteriorating in 2007. Mr. Sullivan was questioned by several lawmakers over why he had requested that accounting losses from A.I.G.’s exposure to these swaps be excluded from calculating one particular compensation plan.

The two former executives also took criticism from their outspoken predecessor, Maurice R. Greenberg, who sought to deflect responsibility in a statement to the committee. Yet Mr. Greenberg, who also questioned the need for the government’s de facto takeover of the company as part of its rescue package, declined to appear, citing illness.[…]

“A.I.G. is blaming its downfall on accounting rules which require it to disclose losses to its investors,” the witness, Lynn E. Turner, said. “That’s like blaming the thermometer, folks, for a fever.”[…]

I keep swearing that I’m going to ignore financial news for the next couple of years, simply because sanity seems to have gone out the window.  Sadly, such news is somewhat relevant to the day job, so I have to keep some awareness of what’s going on in the asylum.  Besides, watching this market crash is like watching train wreck in slow motion; it’s horrifying, but you just can’t pull your eyes away.