Lehman shareholders and employees have been left holding the bag, but Fuld’s bag held almost $500 million dollars from his career at Lehman, including a $22 million dollar bonus in March.

When asked about how things could have gone so wrong for Lehman, Fuld said:

“No one realized the extent and magnitude of these problems, nor how the deterioration of mortgage-backed assets would infect other types of assets and threaten our entire system. With the benefit of hindsight, I can now say that I and many others were wrong.”

After I picked my jaw up off the floor, I remembered that this is exactly the sort of testimony we heard from the Enron guys — before the government spent years prosecuting them and finding out the real truth of their role in ruining not only a corporation, but also the financial lives of many.

Not surprisingly, the Wall Street Journal is reporting that the FBI has launched an investigation into whether Lehman fraudulently misled investors about the firm’s finances.

Fuld is looking mighty uncomfortable up there in front of all those Congressmen. Oh, and the Lehman compensation committee who OK’d his salary? Fuld was involved in appointing the members. Think maybe Fuld could chip in a few bucks toward that $700 billion bail-out?

P.S., Hat-tip to Outside the Margin for tweeting me about the related 60 Minutes piece on the bail-out last night. Off to watch it now!

Stupid.

Exactly the right word for the reason we are in the current financial mess we are in. Why? Because it is a mess that’s the making of those in charge, both in Washington, D.C. and the myriad special financial interests who have their ears.

John McCain blames the chairman of the Securities & Exchange Commission? The White House says institutions failing and the stock market going in the tank are just about “market corrections.” What the …?!?!?

As a former SEC attorney, I have a couple of things to say from an “insider’s” perspective.

No matter who is running the show in the White House or on Capitol Hill, lobbyists and corporate interests have a huge voice in influencing how the rules and regulations of the SEC are crafted, as well as others like the NASD and banking regulators. Maybe not officially, but believe me, there’s puh-LENTY of pressure to water down proposed rules that would give more government oversight and investor protection.

Sometimes they win.

Regardless of whether something would protect investors or make financial institutions more accountable for what they do, how they do it and how they account for it, lobbyists and special interests are always right there to whine — It would be too much work to implement those regulations and safeguards! You can trust us, the market is a good regulator! We know what happened in the 1980s — it will never happen again! We promise!

And on top of that, no matter how much regulators tried to get the budgets they really needed to have the staff necessary to do their jobs right, someone was always there to convince Congress that underfunded, understaffed agencies just didn’t need any more help.

What’s happening today with our economy is a direct result of corporate money and interests trumping the meager resources of government regulators. When agency heads trudge up to Capitol Hill every year to make the case for increased funding so they can do their jobs as effectively as possible, I’m sure you can guess who is right on their heels to make sure that doesn’t happen.

There was a reason the movie Wall Street resonated with so many — things in the real world are always more Gordon Gekko than the Geico Gecko.

That’s why we keep having scandal after scandal after scandal. It’s not because investigators at the SEC aren’t doing their jobs. They are. I know. They just don’t have the time or resources to do it all in a world where the guys who want to keep making the big money have more power and influence than the ones trying to make sure small investors can keep their little money.

Obviously, SEC Chairman Christopher Cox bears a good amount of the responsibility — he could have stood up to the Bush administration and pushed harder to have more SEC “cops” on the street. But he’s not the main culprit, he’s just the one who will be expected to fall on the sword for George Bush. They ones who are really at fault are the ones who have the enormous golden parachutes, no matter whether their financial firms fail or succeed.

And it will happen again in the future unless the regulators get what they really need. You can take that to the bank.