Lehman Brothers Boss Defends $484 Million in Salary, Bonus

Richard Fuld Testifies Before Congress

Despite warnings that "liquidity can disappear quite fast," Fuld "depleted Lehman's capital reserves by over $10 billion through year-end bonuses, stock buybacks, and dividend payments," Waxman said.

Others at the hearing voiced their own concerns about compensation at Lehman.

Nell Minow, the editor of the research firm, The Corporate Library, highlighted Fuld's compensation, which exceeded $70 million last year.

"I think it is fair to say by any standard of measurement that this pay plan is as uncorrelated to performance as it is possible to be," she said.

Minow also found fault with Lehman's corporate board. The Corporate Library grades the performance of corporate boards and last month, Minow said, the firm downgraded Lehman's board to an "F."

"In this case, the board was too old, had served too long, was too out of touch with massive changes in the industry, had too little of their own net worth at risk, and was too compromised for rigorous independent oversight," she said.

Prior to Fuld's testimony, Minow and several other experts testified before the committee on Lehman's bankruptcy and today's financial turmoil.

Dr. Luigi Zingales, a professor of finance at the University of Chicago, said that Lehman's demise was a result of its aggressive use of leverage, or debt to finance investments, "in the context of a major financial crisis."

It made Lehman especially vulnerable to insolvency, Zingales said.

"Lehman did not find itself in that situation by accident; it was the unlucky draw of a consciously-made gamble," he said.

Robert Wescott, the president of the economic analysis and public policy research firm Keybridge Research LLC, said that the root of the financial crisis, overall lay in "easy credit."

Variable rate mortgages with low initial interest rates "gave many families an inflated sense of their capacity to afford housing," Wescott said. As a result, he said, housing prices began rising as high as 30 percent per year and "a housing frenzy developed."