In an opening statement at a House Financial Services hearing, Rep. Paul Kanjorski, D-Pa., said the investment bank's collapse was "another massive corporate failure," that "reveals that Wall Street executives continued to embellish the truth, tell half-truths and hide behind their power in the marketplace."
Kanjorski also said the autopsy of Lehman Brothers compiled by Anton Valukas showed regulators "failed to uncover wrongdoing, mismanagement, and capital shortfalls even as they fiddled in Lehman's offices."
Rep. Spencer Bachus, R-Ala., said Lehman Brothers was "both a case study and a cautionary tale of what can only be described as a gross regulatory failure."
Regulations already in place, "simply were not utilized," he said.
U.S. Treasury Secretary Timothy Geithner said the financial meltdown represented a systems failure.
As an investment bank, Lehman Brothers was "able to escape consolidated supervision because of its corporate form," he said.
He blamed executives who pay "little attention to the risk of long-term loss" and on unregulated instruments like derivatives that operate "largely in the dark without oversight."
"Our financial system allowed risk to move towards areas where regulations were most lenient," he said.
Copyright 2010 United Press International,
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