Another dismissive reply, the committee found, came from George Walker, a cousin of President Bush, who is a member of Lehman's executive committee. In response to the suggestion of eliminating bonuses, Walker said: "Sorry team. I'm not sure what's in the water at 605 Third Avenue today…I'm embarrassed and I apologize."

Fuld sought to shift attention to the regulators. He said that the Securities and Exchange Commission and the Federal Reserve "actively conducted regular, and at times, daily oversight of both our business and balance sheet."

He said that "quarter to quarter, month to month, regulators saw how we reduced our commercial real estate holdings; how we increased our liquidity pool; how we decreased leverage and strengthened our capital levels."

In sum, he said, regulators "were privy to everything as it was happening."

His stance elicited little sympathy from either lawmakers or expert witnesses or lawmakers. Elijah Cummings, Democrat of Maryland, pointed to a May 26, 2008, email in which a high-ranking Lehman executive, David Goldfarb, proposed spending recently raised sums to "aggressively" go into the market and spend it to "buy back lots of stock" and "hurting Einhorn bad," presumably referring to Lehman critic David Einhorn.

"When people in Baltimore perform poorly, they get fired," said Cummings. "They certainly don't get a bonus."

Earlier at the hearing, Nell Minow, head of the Corporate Library, an executive compensation research group, accused Fuld of surrounding himself with "a bunch of retirees who barely knew what a derivative is." She said "the risk committee met only twice in two years—that tells you everything you need to know."
 
The hearing was minutes old before political lines were drawn up—with Republicans repeatedly insisting it's not Republicans or deregulation that are at fault.

The five committee hearings, which include a look Tuesday at rescued insurance giant A.I.G., are intended, said Representative John Mica, Republican of Florida, "to deflect attention" away from regulatory failures and flawed performance by Fannie Mae and Freddie Mac.

He said he wanted a special counsel, and insisted that any hearings are a "sham" if they don't call former Fannie Mae head, Franklin Raines, to testify—echoing Republican presidential ads trying to link Raines and Democratic presidential candidate Barack Obama.

Mica did have an appreciation for the theater of the hearing.  "If you haven't figured it out yet, your role here today is to be the villain," he told Fuld.

As the hearing closed, some spectators felt that way. They started shouting questions about why Congress hadn’t held hearings before voting on the bailout package. Fuld, and his entourage of a half-dozen, ducked into the back of the committee room and came out about 10 minutes later. That didn’t save him from having a group of Code Pink protestors – who have regularly protested against the Iraq war – from yelling that he was a “criminal” and chasing him down the hallway with Capitol Hill police doing their best to keep all parties separated  as an irritated-looking Fuld and his party scrambled toward black SUVs parked nearby..