[americanophile]

For months we heard about how the American system failed, how the European model was better and had eliminatd this kind of free-wheeling capitalism that leads to 'boom and bust'...which is why I found this so interesting:

"the new discoveries by Mr. Valukas have taken even veteran observers by surprise. Chief among these was the revelation of a particularly aggressive accounting practice, known internally as Repo 105, that Mr. Valukas said helped the investment bank mask the true depths of its financial woes -snip- Over hundreds of pages, Mr. Valukas details the genesis of and the process behind Repo 105. Based on standard repurchase agreements — short-term loans commonly used by many firms for daily financing needs, in which borrowers temporarily exchange assets in return for cash up front — Lehman took a particularly aggressive accounting approach to these transactions.

Here, the investment bank used repos to temporarily park assets off its books to make its end-of-quarter debt levels look better than they did — while calling them sales instead of loans.

The accounting tactic, first used by Lehman in 2001, had one catch, according to Mr. Valukas: no American law firm would sign off on its use.

Enter Linklaters, a highly respected British law firm that gave Lehman the answer it wanted. So long as the repos were conducted in London through the bank’s European arm, and so long as the company took other cosmetic steps to make these transactions appear to be sales instead of financings, Linklaters determined that they would pass regulatory muster."

[1rudeboy]

look

[Bloody Sam Roberts]

“actionable balance sheet manipulation.”

We shall se, shan't we?

I won't hold my breath.

[Logical me]

To be expected, and why not. Honor among most of the huge financial institution is a joke.

[No Left Turn]

I believe a court-appointed examiner is really just an attorney seeking cause to file suit. Not defending Lehman -just saying this may not be the most impartial of reports. It sounds like it’s an official government finding, but it’s not.

[Moorka]

Shocked. I am shocked.

Members of the 110th Congress who have received campaign contributions from Lehman Brothers, 1989-2008

Name Office State Party Grand Total Total from
PACs Total from
Individuals
Clinton, Hillary S NY D $409,980 $3,000 $406,980
Obama, Barack S IL D $395,574 $0 $395,574
Schumer, Charles E S NY D $181,450 $25,500 $155,950
Dodd, Christopher J S CT D $165,800 $25,400 $140,400

[kabar]

This is being released to support more federal regulation of the banking industry and Wall Street.

[kittymyrib]

I’ll believe Congress is sincere in wanting financial reform when they launch an investigation of Goldman Sachs. Oh, that’s right...GS is “too big to investigate” because so many government officials have come from that mother ship.

[Oatka]

aggressive accounting

A PC word for "cooking the books".