(Reuters) - Richard Fuld, former CEO of Lehman Brothers, was summoned to Capitol Hill on Tuesday to answer for the collapse of the fallen Wall Street giant, amid signs a vote on historic financial reforms may be delayed.
Fuld's October 2008 appearance before lawmakers was marked by protesters with signs reading "shame" and "cap greed".
The highly anticipated clash of Fuld and Frank was still to come as the hearing got under way, with lawmakers decrying the 2007-2009 financial crisis and urging a regulatory overhaul amid fallout from fraud charges against Goldman Sachs.
"We meet once again to examine yet another massive corporate failure," said Democratic Representative Paul Kanjorski as top regulators, including U.S. Treasury Secretary Timothy Geithner, arrived to testify about the Lehman debacle.
"We have heard this sad song of corporate greed and regulatory breakdowns one too many times in recent years," Kanjorski said. "Today's hearing builds a case for Wall Street reform ... The events that led to Lehman's collapse add another verse to this troubling refrain in American capitalism".
As the House panel examined the 2008 Lehman bankruptcy -- an event that shook capital markets worldwide -- the Senate was moving toward a pivotal vote on the most substantive overhaul of U.S. financial regulations since the Great Depression.
President Barack Obama has made reform a top priority. He supports a bill approved by a Senate committee last month and now headed toward the Senate floor for debate and a decision, but facing solid opposition from Republicans.
Democrats, in control of 59 votes in the 100-member Senate, need the support of just one Republican to overcome procedural hurdles likely to be thrown in front of the bill. One Democratic official said the Senate now looked unlikely to take up the bill before next week -- later than previously hoped.
"If a single Republican is not willing to join with us, there will be no Wall Street reform, the Republicans will have killed Wall Street reform. I'm confident that's not what's going to happen," said Senate Democratic Leader Harry Reid as the chamber opened for the day.
HOUSE BILL APPROVED IN DECEMBER
The U.S. Securities and Exchange Commission on Friday brought fraud charges against Goldman Sachs, which emerged from the crisis as Wall Street's dominant player, linked to its structuring and marketing of a subprime mortgage investment.
With Democrats betting that the Goldman case would boost public anger against the financial industry and improve chances of their bill's passage, Goldman on Tuesday reported that its first-quarter profits nearly doubled.
The House approved a reform bill in December that embraced many of the reforms proposed by Obama in mid-2009. But the Senate has yet to act, with the result that regulation has changed little since Lehman fell apart in late 2008.
Geithner appealed to lawmakers to complete their work on reforms in remarks at the House hearing, where he was joined in testifying by Federal Reserve Chairman Ben Bernanke and U.S. Securities and Exchange Commission Chairman Mary Schapiro.
Fuld was expected to tell the committee that he only learned of Lehman's use of a controversial accounting technique a year after the investment bank filed for bankruptcy.
A court-appointed examiner reported in March that Lehman used a technique known as "Repo 105" to temporarily remove some assets from its books, obscuring its full financial picture.
"I have absolutely no recollection whatsoever of hearing anything about Repo 105 transactions while I was CEO of Lehman," Fuld said in the prepared remarks to be delivered.
Fuld left Lehman at the end of 2008.
Additional reporting by Rachelle Younglai and Clare Baldwin, with Steve Eder in New York; editing by Patrick Graham
Reuters
