THE SHORT-SELLERS did it, Richard Fuld, former Lehman Brothers chief executive, said in testimony to a Congressional oversight committee yesterday.

In an extraordinary public autopsy into the biggest bankruptcy in US history, Mr Fuld declared that he felt "horrible" about what had happened to the venerable investment bank, but insisted Lehman was brought down by a crisis of confidence in the marketplace, combined with a plague of short-selling.

By blaming the short-sellers, Mr Fuld echoed the testimony of a fellow victim of the credit crisis earlier this year. Alan Schwartz, former chief executive of Bear Stearns, told a Senate committee in April that short-sellers had helped create a run on the bank, which sapped Bear Stearns's liquidity and eventually forced it into a shotgun marriage to JPMorgan Chase.

"We believed we were well-protected to withstand even the most difficult markets. What we have seen recently in the international credit markets has overwhelmed many financial institutions and threatened all financial institutions," Mr Fuld said in testimony given to reporters before the hearing. "We did everything we could to protect the firm."

However, in the end, "we were overwhelmed, others were overwhelmed, and still other institutions would have been overwhelmed had the government not stepped in to save them".

Mr Fuld said what had happened at Lehman could have happened to "any other firm on Wall Street, and almost did". He pointed to a "litany of destabilising factors" including: rumours; widening credit default swap spreads; short attacks; credit agency downgrades; a loss of confidence by clients and counterparties; and "strategic buyers sitting on the sidelines waiting for an assisted deal".

Henry Waxman, Democratic chairman of the oversight committee, castigated Mr Fuld, who he said took "no responsibility" for the collapse. Mr Waxman said thousands of pages of internal Lehman documents portrayed a firm in which "there was no accountability for failure".

Rather than allowing Mr Fuld place blame for the bankruptcy with short-sellers, Mr Waxman suggested Mr Fuld's preoccupation with David Einhorn, a hedge fund manager who expressed doubts about Lehman's balance sheet and said he had a large short position on Lehman stock, caused him to abandon his fiduciary obligation to shareholders.

In May of this year, Lehman sought an injection of $5 billion (€3.7 billion) in capital from Korea Development Bank. David Goldfarb, a Lehman manager, wrote to Mr Fuld telling him that if Lehman succeeded in the capital raising, Lehman should spend $2 billion of this buying back the company's stock "and hurting Einhorn bad"; "I agree with all of it," Mr Fuld responded in an e-mail.

In his testimony, Mr Fuld admitted he had totally misjudged the severity of the credit crisis that began in June 2007, saying at one point that the troubles in the capital markets were "behind us".

Even before Mr Fuld appeared, Democratic congressman John Tierney lashed out at his testimony, saying he had blamed everyone "but himself" for the collapse. - (Financial Times service)