In testimony to Congress on the failure of Lehman Brothers, former CEO Richard Fuld stated: As C.E.O., I ran more of a “what do I really need to be focused on” mentality. . . . I was focused on less-liquid assets—commercial real estate, residential mortgages, leveraged loans. I was not focused on the most highly liquid securities. I was not focused on government securities that could vary between $50 billion and $100 billion a day.
How does this testimony illustrate a principal–agent problem?