A defiant Richard Fuld took responsibility for his actions yesterday but denied that he had a hand in the meltdown of Lehman Brothers.

The chairman and chief executive of the collapsed investment bank was facing a Congressional hearing, in which one senior politician accused him of squandering billions of dollars despite clear warning signs that the economic tide was turning.

Mr Fuld, who declared his firm bankrupt last month, blamed media reports, based on “rumours, speculation, misunderstandings and factual errors” for prompting a loss of confidence that ultimately sank the company.

He also blamed out-of-date rules that allowed short-selling of Lehman’s shares, slow reactions by regulators, accounting rules that forced it to write down the value of assets, the increased cost of borrowing and the prospect of ratings downgrades.

In the first hearing into what caused America’s financial markets to collapse, Henry Waxman, the Democratic chairman of the oversight committee holding the hearing, lambasted Mr Fuld, saying that he “takes no responsibility” for the troubles at Lehman. He said that in January, Mr Fuld and his board were warned in an internal document that Lehman’s “liquidity can disappear quite fast”.

Despite that, Mr Waxman said: “Mr Fuld depleted Lehman’s capital reserves by over $10 billion through year-end bonuses, stock buybacks and dividend payments”. Employees who feared for their bonuses were told not to worry.

While Mr Fuld refused to accept any direct responsibility for Lehman’s meltdown, which he blamed on circumstances beyond his control, he did address Mr Waxman’s attack. “I want to be very clear. I take full responsibility for the decisions that I made and for the actions that I took based on the information we had at the time,” he said.

“No one realised the magnitude of these problems. I said what I believed to be true – that the worst of the impact to the financial markets was behind us. With the benefit of hindsight, I can now say that I and many others were wrong,” he added.

“We did everything we could to protect the firm. We made changes to our senior management team and reduced expenses. We sought strategic investors for a sale of all or part of the firm. we called on regulators to clamp down on abusive short selling practices,” Mr Fuld said.

Mr Fuld also took a swipe at the US government, which orchestrated the rescue of other groups, such as Bear Stearns, Freddie Mac and Fannie Mae, but allowed Lehman to go bankrupt.

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