Dick Fuld: Crazy Like a Fox?

Dick Fuld appeared before the Financial Crisis Inquiry Commission today and, some would say, showed himself as completely untethered from reality. The former Lehman Brothers CEO wasn't about to mince words; at the outset of his prepared remarks he asserted:

Lehman’s demise was caused by uncontrollable market forces and the incorrect perception and accompanying rumors that Lehman did not have sufficient capital to support its investments.

"Say WHAT?" was more or less the reaction over at naked capitalism. For how could any man be in such denial?

For my part, I think Fuld may be playing a role on a stage. Consider that a large Wall Street investment bank doesn't just go gently into the night. Lehman wiped out a lot of wealth on its way down. And note that phrase that keeps recurring in Anton Valukas' very, very thorough report on Lehman's demise: "colorable" claims. In other words, plenty of hungry lawyers may have sufficient grounds to sue Fuld's butt ten ways to Tuesday.

Also lots of prosecutors would love to put him behind bars for a long while. Let's not forget that Sarbanes-Oxley requires that a CEO sign off on financial statements as true and accurate, and in doing so, takes responsibility for their content.

Now, if you're Fuld, and you're sweating and conniving a way out of this mess, you know you can't really plead insanity. As bizarre as some in the current crop of U.S. CEOs are, they hardly qualify as insane. Yet there is another option that looks a bit like insanity, a sort of blind and resentful denial of any responsibility. Don't even try to be reasonable.

So if we could rig Fuld up to a lie detector, it would be interesting to find out if he really believes what he's saying right now -- if his public face concords with his private thoughts.

In other words, is Dick Fuld crazy? Or just crazy like a fox?