Lehman CEO Takes Responsibility for Stunning Loss
Lehman Brothers Chief Executive Richard Fuld on Monday took the blame for the company's stunning second-quarter loss of nearly $3 billion, and said the investment bank was too slow in reacting to the market's tumult.
"This is my responsibility," Fuld declared. "We made active decisions to deploy our capital, some of which in hindsight were poor choices because we really didn't act quickly enough to the eroding environment."
Fuld, sounding agitated during a conference call with analysts, said the company has "made a number of changes and now it is now my job to make sure we execute." Along with recording the bank's first loss since going public in 1994, Lehman last week raised $6 billion of fresh capital and demoted its chief financial officer and chief operating officer.
Lehman also reduced the size of its balance sheet by $147 billion, more than Fuld had targeted for the quarter. Many of the reductions came from risky mortgage-backed securities and leveraged loans that has caused financial companies globally to write down nearly $300 billion since last year.
Fuld concluded by telling analysts that "these are still challenging markets, but our core franchise and culture are strong."
Shares rose $1.80, or 7 percent, to $27.61 in midmorning trading.