Posted on 03/13/2010 8:58:59 AM PST by Ernest_at_the_Beach
Lehman is currently undergoing court-supervised liquidation to pay off creditors.
Valukas mentioned ex-Chief Executive Dick Fuld and chief financial officers Chris O'Meara, Erin Callan and Ian Lowitt as possibly facing claims for negligence or breach of duty.
The report cited a practice known internally as "Repo 105," in which Lehman allegedly used repurchase agreements -- the temporary exchange of assets for cash -- that were structured as sales so that the leverage could be moved off the firm's balance sheet. See story on Lehman's accounting "drug" Repo 105.
As a result, the report says, Lehman may have already been insolvent on Sept. 2, 2008, almost two weeks before its Sept. 15 bankruptcy filing rocked the financial world and helped send the stock market into a nosedive.
"In this way, 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," the report said.
A Reuters report quoted an attorney representing Fuld as saying the former CEO "did not know what those transactions were" and that "he didn't structure them or negotiate them, nor was he aware of their accounting treatment."
(Excerpt) Read more at marketwatch.com ...
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The Valukas report also said evidence exists to support a professional malpractice claim against Lehman auditor Ernst & Young, as the firm "took no steps to question or challenge the non-disclosure by Lehman of its use of $50 billion of temporary, off-balance sheet transactions," according to the Journal.
If this isn’t end with a Sarnes-Oxley (?) prosecution and conviction, then we’ll never see one.
SOX is the most expensive, and nearly useless, piece of ‘legislation’ passed since the horrible ADA.
Of course, we could fill several pages listing the bad or anti-business legislation passed by CONgress since 1980....
Sarbanes-Oxley. Maybe the worst piece of legislation BEFORE the healthcare bill.
Lehman Brothers managed Fla public assets, sold securities, underwrote bond deals and handled residential and commercial mortgages. Local Fla governments are stuck with about $556 million in tainted securities that they can't redeem.
Fla counties, cities and school districts face a loss of more than $300 million for roads, sewers and schools. The state has $290 million less to pay for everything from hurricane claims to health care, community colleges and care for infants with disabilities.
The biggest casualty is Florida's giant public pension fund. Fla took a $230 million hit on Lehman stocks and bonds. More than $440 million disappeared from the pension fund that pays benefits for some 1 million retirees and public employees.
The pension fund holds another $53 million in Lehman bonds that have lost most of their value and has $323 million tied up in tarnished mortgage-related securities purchased from Lehman.
If the state sold those securities today, the pension fund would lose about $188 million more.
Further north, 75% of NJ Gov Jon Corzine's appointments to the State Investment Council (invests pension billions) had ties to the bankrupt Lehman Bros.
The New Jersey Economic Development Authority gave Lehman Bros $123 Million tax dollars FOR DOING NOTHING. That's right---FOR DOING NOTHING. The EDA brainiacs unloaded $123 million tax dollars on Lehman Brothers (AND Morgan Stanley) .... simply to cancel an earlier deal.
Corzine once headed Goldman Sachs.
HOW MUCH DID YOUR STATE LOSE FROM THE LEHMAN BANKRUPTCY?
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Yet these losses are trivial compared to the collateral damage. Obama's trillion dollar bailouts are a direct result of the instability that followed the collapse of Lehman.
REFERENCE We kept reading and hearing about Ohaha rushing Congress to approve $787 billion stimulus package" early this year. Now uber-Lobbyist Thomas Hale Boggs, Esq interviewed by network news said, "there's $2 TRILLION federal stimulus waiting to be distributed". Boggs said he is getting unprecedented numbers of calls from all over the US......from those who want a piece of it. (Boggs is the son of former Cong Hale Boggs and brother of former ABC-TV commentator Cokie Roberts).
The reality of the Ohaha govt:
Behind The Real Size of the Bailout (Mother Jones reports its $14 trillion)
Mother Jones | Dec. 21, 2009 / FR Posted January 04, 2010 by E. Pluribus Unum
A guide to the abbreviations, acronyms, and obscure programs that make up the $14 trillion federal bailout of Wall Street.
The price tag for the Wall Street bailout is often put at $700 billion—the size of the Troubled Assets Relief Program. But TARP is just the best known program in an array of more than 30 overseen by Treasury Department and Federal Reserve that have paid out or put aside money to bail out financial firms and inject money into the markets. To get a sense of the size of the real $14 trillion bailout, see our chart here. Below, a guide to the pieces of the puzzle:
Treasury Department bailout programs (controlled by Rahm Emanuel)
Money Market Mutual Fund: In September 2008, the Treasury announced that it would insure the holdings of publicly offered money market mutual funds. According to the Special Inspector General for the Troubled Asset Relief Program (SIGTARP), these guarantees could have potentially cost the federal government more than $3 trillion [PDF].
Public-Private Investment Fund: This joint Treasury-Federal Reserve program bought toxic assets from banks and brokerages—as much as $5 billion of assets per firm. According to SIGTARP, the government's potential exposure from the PPIF is between $500 million and $1 trillion [PDF].
TARP: As part of the Troubled Asset Relief Program, the Treasury has made loans to or investments more than 750 banks and financial institutions. $650 billion has been paid out (not including HAMP; see below). As of December 21, 2009, $117.5 billion of that has been repaid. Government-sponsored enterprise (GSE) stock purchase: The Treasury has bought $200 million in preferred stock from Fannie Mae and another $200 million from Freddie Mac [PDF] to show that they "will remain viable entities critical to the functioning of the housing and mortgage markets." GSE mortgage-backed securities purchase: Under the Housing and Economic Recovery Act of 2008, the Treasury may buy mortgage-backed securities from Fannie Mae and Freddie Mac. According to SIGTARP, these purchases could cost as much as $314 billion [PDF].
--SNIP--- long read
Federal Reserve bailout programs
Commercial Paper Funding Facility: With the support from the Treasury, the Fed established the CPFF in October 2008 to increase the availability of short-term debt (commercial paper) funding. Up to $1.8 trillion [PDF] was earmarked for the program.
Mortgage-backed securities purchase: In 2009, the Fed earmarked up to $1.25 trillion to buy investments based on home loans.
Term Asset-Backed Securities Loan Facility: TALF provides financing to investors who are buying asset-backed securities. In February 2009, the Fed and Treasury announced an expansion of the program to generate up to $1 trillion in new lending.
Foreign Central Bank Currency Liquidity Swaps: The Fed has provided $755 billion [PDF] for currency liquidity swaps with foreign central banks.
--SNIP--- long read
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CIRCA Sept 15, 2009 A SHOCKING DISPLAY OF OBAMA'S THIRST FOR POWER
FOX News' Judge Napolitano notes: if implemented, the unconstitutional proposals Obama urged in his Sept 2009 speech to Wall Street will amount to a final coup d’état by banksters, their technocrats and enforcers, at the Federal Reserve (*the privately-held bankster cartel that masquerades as a government agency).
Obama's "reforms" would install a dictatorial regulatory power controlled by international bankers over the entire US economy — down to the local grocer and hot dog vendor on the corner.
It will control our lives down to the smallest detail. It will require us to ask permission for the most mundane and routine of financial transactions. IT MUST BE BE RESISTED AT ALL COSTS. VIDEO LINK AVAILABLE Judge Andrew Napolitano On Obama/Bankster Takeover
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