As Bank of America shows its tender underbelly in the form of a profit and dividend cut and Citigroup and Wells Fargo cool their respective heels in the fight over Wachovia in a two-day truce, a new theatre of battle is opening up over Lehman Brothers CEO Dick Fuld. Should he be taken to the tool shed over allowing the bank to pay more than $23 million to three top executives on the cusp of the firm’s implosion?

Lehman Brothers Holdings Inc. agreed to pay a total of more than $23 million to three executives leaving the securities firm just days before it collapsed, according to internal emails made public by congressional investigators.

The disclosure came as a House committee grilled Lehman Chief Executive Richard Fuld Jr. and painted a picture of a financial firm that operated like a casino run by greedy executives. The lawmakers repeatedly asked Mr. Fuld whether he deceived investors about the health of his firm in its last week, and cited hefty borrowing, high pay and excessive risk-taking by Lehman over the past several years.

Lehman Chief Executive Richard Fuld told Congress Monday that U.S. banking regulators knew exactly how Lehman was pricing its distressed assets and about its liquidity in the months before its collapse.

In his first public statements since Lehman filed for bankruptcy protection Sept. 15, Mr. Fuld testified that he didn't deceive investors and others about the securities firm's financial health. This was despite repeated internal warnings, cited by lawmakers, that Lehman was on shaky ground.

In sometimes halting language, Mr. Fuld said that while he takes responsibility for decisions the firm made, he believes that Lehman was brought down by outside forces including lax oversight and "short sellers," traders who were betting Lehman's stock price would fall.

Mr. Fuld said the payments to the employees were justified. He said Lehman's board deemed $2 million for one executive fair given his years at the firm. A second executive was due $16.2 million, Mr. Fuld testified, because of a contractual obligation. The third executive, who wasn't cited in the testimony, was slated to receive $5 million. The first two employees were "involuntarily terminated," while the third left voluntarily, according to documents.

Meanwhile, lawmakers estimated that Mr. Fuld pocketed roughly $480 million in pay since 2000. He suggested that his pay was closer to $350 million in that time and noted that Lehman's compensation system ties executive pay to performance. His said his 2007 pay, most of which came in Lehman stock, was nearly wiped out because of Lehman's bankruptcy filing.

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