The provision was based on the assumption that when CEOs admitted they didn’t know about accounting “errors” that caused collapses and massive disruptions, that they were telling the truth and that, if they had to be personally responsible, they might look into accounting irregularities and stop mischievous underlings from ruining companies. It’s surprising now to think that Congress was that gullible, or thought the American people were.

In the case of Lehman CEO Richard Fuld, he’s been found “grossly negligent” for certifying accounting statements he made no effort to look into, just as you might think. According to Michael de la Merced and Andrew Sorkin, Lehman shifted $50 billion off its books with fraudulent accounting tricks in the months before its collapse. They’d been engaging in the transaction since 2001, and there wasn’t a thing that the post-Enron regulations did to stop it.

Richard S. Fuld Jr., Lehman’s former chief executive, certified the misleading accounts, the report said.

“Unbeknownst to the investing public, rating agencies, government regulators, and Lehman’s board of directors, Lehman reverse engineered the firm’s net leverage ratio for public consumption,” Mr. Valukas wrote.

Mr. Fuld was “at least grossly negligent,” the report states, adding that Henry M. Paulson Jr., who was then the Treasury secretary, warned Mr. Fuld that Lehman might fail unless it stabilized its finances or found a buyer.

But there’s more: Mike Spector, Susanne Craig and Peter Lattman at The Wall Street Journal report that a senior executive flagged the transactions for management and the auditors as fraudulent — but was, of course, ignored.

In one instance from May 2008, a Lehman senior vice president alerted management to potential accounting irregularities, a warning the report says was ignored by Lehman auditors Ernst & Young and never raised with the firm’s board.

Of course, Fuld swore in 2009 that he knew nothing about it, but his employees say otherwise.

Lehman’s own global financial controller, Martin Kelly, told the examiner that “the only purpose or motive for the transactions was reduction in balance sheet” and “there was no substance to the transactions.” Mr. Kelly said he warned former Lehman finance chiefs Erin Callan and Ian Lowitt about the maneuver, saying the transactions posed “reputational risk” to Lehman if their use became publicly known.

In an interview with the examiner, senior Lehman Chief Operating Officer Bart McDade said he had detailed discussions with Mr. Fuld about the transactions and that Mr. Fuld knew about the accounting treatment.

Nonetheless, Fuld is hiding behind plausible deniability, like his predecessors did before and just as the new rules were supposed to stop.

In a statement, Mr. Fuld’s lawyer, Patricia Hynes, said, “Mr. Fuld did not know what those transactions were—he didn’t structure or negotiate them, nor was he aware of their accounting treatment.”

You can order a CEO to be more responsible for his company, but you’ll never get his lawyer to admit that he was when called for comment after he sends it into bankruptcy by countenancing accounting gimmicks to maintain the value of his stock options.

Fuld has deflected questions on whether he’s unfair, unethical and has committed fraud. He has spoken deliberately, demonstrated little passion and largely stonewalled lawmaker’s questions as if he were a member of the Bush administration’s Justice Dept. Until Peter Welch (D-Vt.) asked Fuld why the government bailed out AIG but didn’t bail out Lehman.

Fuld became animated: “I do not know why we were the only one.”

He discussed how the Treasury Dept. bailed out fellow investment bank Bear Stearns in March, and Bank of America bought Merrill Lynch the week Lehman declared bankruptcy.

He also encouraged questions from Welch and Rep. Dennis Kucinich (D-Ohio) that AIG was bailed out because Goldman Sachs, where Paulson was formerly CEO, had a reported $20-billion tie to the insurance giant.

With the hearing winding down, Fuld kept saying, “I wake up every single night thinking what I could have done differently. This is a pain that will stay with me the rest of my life.”

On whether the Treasury Dept. should have bailed out Lehman, the committee actually seems in agreement with Fuld.

Henry Waxman (D-Calif.) said in his opening statement: “Many experts think Lehman’s fall triggered the credit freeze that is choking the economy and made the $700 billion rescue necessary.”

The committee holds a hearing tomorrow on AIG.  Will the committee push the line of questioning encouraged by Fuld– that AIG was bailed out, and Lehman Bros. wasn’t, because that was the scenario most beneficial to Goldman Sachs, a rival investment bank to Lehman?

No one is suggesting that Paulson was merely making decisions based on Goldman Sach’s best interests. But the oversight committee’s work may discover that it was at least a factor.

The committee has produced internal Lehman Bros. documents that show Lehman CEO Richard Fuld resisted claims to limit his compensation and rejected any responsibility for the investment bank’s bankruptcy. Fuld will testify in an hour, and it could get ugly. Rep. Elijah Cumming (D-Md.) wondered how “he sleeps at night”.

But for now, House Republicans are taking turns blasting Rep. Henry Waxman, (D-Calif.) the committee chairman, for not scheduling a hearing on Fannie Mae and Freddie Mac. The committee Republicans contend that Democrats had blind faith in Fannie’s and Freddie’s plan to help low- and middle-income homeowners and ignored the government sponsored enterprises’ risky purchases of subprime mortgages.

Rep. Tom Davis (R-Va.) and Rep. John Mica (R-Fl.) keep circling back to how the Clinton administration built up Fannie and Freddie. The shady accounting practices of former Fannie CEO Franklin Raines, a Clinton appointee, are also fair game.

The Republican seem off the mark. They keep hammering Raines, who resigned in 2004. But the riskiest purchases by Fannie and Freddie happened in 2005-2007.

Democratic and Republican committee members might soon unite in bashing Wall Street’s current symbol of greed, Fuld. But they look far apart in agreeing on how the government helped cause the crisis.