Washington - Richard Fuld, chief executive of Lehman Brothers Holdings Inc, was forced to defend his own lofty pay check before Congress on Monday and warned that the disaster which drove his company into the ground could have happened to any financial firm.

Fuld said he felt "horrible" about the demise of the 158-year-old institution and took responsibility for his actions, but he warned that the "financial tsunami" that engulfed his company was part of a much wider loss of confidence in the banking system.

"At Lehman Brothers, the crisis of confidence that permeated the markets led to an extraordinary run on the bank. In the end despite all of out efforts, we were overwhelmed," he told the House Committee on Oversight and Government Reform.

"What happened to Lehman Brothers could have happened to any financial institution, and almost did happen to others," Fuld said, blaming investors for sending stocks tumbling and "false rumours" for eroding confidence.

The collapse of Lehman last month, which was filed after the government refused to finance the venerable institution's sale to competitors, sent shockwaves through the entire financial world.

Global stocks plunged and credit availability dried up as banks began hoarding cash, fearful that their own weak capital positions could lead them into a similar fate. Lehman's bankruptcy was the largest in US history.

Congress, fresh from passing a 700-billion-dollar rescue plan for the financial industry on Friday, is holding a series of committee hearings this week as it begins the process of figuring out just what happened and how to prevent a similar crisis in the future.

Conservative and liberal politicians alike have slammed Wall Street greed for causing the mess by offering mortgages to people who could ill-afford them and then repackaging those loans into ever-more complicated securities options for investors.

Friday's legislation allowed the government to take up to 700 billion dollars in damaged mortgage assets off of banks' balance sheets.

Many of the questions aimed at Fuld on Monday concerned his 480- million-dollar salary over the last eight years.

"Your company's now bankrupt. Our economy is in a state of crisis. But you get to keep 480 million dollars. I have a very basic question for you: Is this fair?" asked Henry Waxman, the Democratic chairman of the oversight committee.

Fuld argued the "compensation committee" that worked out salaries had the interests of shareholders at heart. He said much of his earnings were in Lehman stocks and that he also had a vested interest in the company's survival.

"When the company did well, we did well. When the company did not do well, sir, we did not do well," Fuld said.

Fuld said the financial firm's serious liquidity issues did not become clear until earlier this year. He admitted mistakes "in hindsight" and acknowledged that better regulation and higher capital requirements could help avoid problems in the future.

"Nobody, including me, anticipated how the problems that started in the mortgage markets would spread to our credit markets and our banking system, and now threaten our entire financial system and our country," Fuld said. (dpa)