Should We Hold Lehman Executives Accountable?

Card: Should we hold Lehman executives accountable?

Stiglitz:    Clearly, I think they should be held accountable… they probably won’t, least not to a very large extent, you know, it was… in the first bail out of Fannie Mae and Freddie Mac, I was very critical about that, in part, because they left the management, who have gotten then into the mess, in charge.  You know, any system of accountability says if you are so reckless to get us into this mess, how can we trust you to get us out?  And you are enriching your pockets, look at the pay that those guys are getting, while they [were leading] their country into these serious problems.  Now, things look a little bit better but the difficulty of holding them accountable will not be very easy.  That is to say that their bonuses were paid on the basis of the performance in 2006, 2007.  There was no provision that said, “You make loss in 2008, 2009, you’ll have to get that… some of that back.”  Now, it was a high level of incompetency but from a legal standard, it probably doesn’t rise to the level of fraud that would, at least, in most of the cases and some of them may but to the… that would allow the canceling of their… of their [IB] contracts, canceling their pension benefits.  So, in fact, most of these people are going to do very well.  Now, they’re going to be crying, let me… you should be clear, they’re going to be crying, they’re going to say, “We would have been so much wealthier had you [bailed] us up… out even better.”  You know the [Bernstein’s] people are crying, you know, they’re saying, “Look at what’s happened to our wealth.”  I know some people in Citibank who, you know, are saying the same thing.  If our stock prices have remained at the inflated level, we would be wealthy… very wealthy, now, we’re only wealthy or put to it more accurately they would have been very, very, very wealthy, now they’re only very, very wealthy.  So that point is that, they’re going to walk away with a lot of money.   Some of them will not have taken prudential action, would not have put enough money away and there will be some people facing a problem.  But we, almost surely, will not hold most of these people accountable for what has happened.