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A FEW weeks ago, two Republican House members asked Ben Bernanke, the chairman of the Federal Reserve, whether the Fed knew — before Lehman’s bankruptcy examiner revealed it — about the bookkeeping scam at Lehman known as “Repo 105.” This scam allowed Lehman to disguise how much debt it was carrying, right up until it collapsed. Lehman got new loans to pay off old loans, pretended the new loans were “sales,” and through a complicated series of steps made both the old and new loans disappear just in time for its quarterly reports. Mr. Bernanke said the Fed had known...

March 12, 2010, 8:00 pm The bankruptcy examiner’s report filed by Anton R. Valukas on the 2008 demise of Lehman Brothers discusses some accounting gimmicks that are eerily reminiscent of how Enron tried to prop up its balance sheet back in 2001 before it collapsed. Both companies appear to have played right along the edge of properly accounting for transactions designed to make them appear much stronger than they turned out to be, becoming steadily more aggressive as they teetered on the brink of ruin. Peter J. Henning, writing for DealBook’s White Collar Watch, is a commentator on white-collar crime...

Examiner says legal claims possible against CEO Fuld, J.P. Morgan, Citi, others LOS ANGELES (MarketWatch) -- Bankrupt financial giant Lehman Bros.' former top officers, its auditor and several rival brokers could face legal claims, a court-appointed examiner said in a report released Thursday.In a 2,200-page report, examiner Anton Valukas said that while Lehman's directors at the time of the collapse weren't necessarily responsible, some of its top executive management might be held liable, according to reports of the findings. Lehman is currently undergoing court-supervised liquidation to pay off creditors. Valukas mentioned ex-Chief Executive Dick Fuld and chief financial officers Chris...

For the year that it took the court-appointed examiner to complete his report on the demise of Lehman Brothers, officials from Wall Street to Washington were anticipating it as the definitive account of the largest bankruptcy in American history. And the report did just that when it was unveiled on Thursday, riveting readers with the exhaustive detail contained in its nine volumes and 2,200 pages. Yet almost immediately, it raised a host of new questions. Now government regulators have what some lawyers call a road map for further inquiry into former Lehman executives like Richard S. Fuld Jr. and the...

LONDON (MarketWatch) -- An accounting maneuver known as "Repo 105" was a "drug" that helped maintain a veneer of health on Lehman Brothers' crumbling balance sheet in the months running up to its bankruptcy, a report from a court-appointed examiner shows.The firm began using the Repo 105 as far back as 2001, but its use picked up sharply toward the end of 2007, even in the face of concern from some staff, as banks worldwide came under more and more pressure to cut their leverage. Responding to an April 2008 email asking if he was familiar with the transaction, Bart...

Presenting a detailed look at "Repo 105" - the next soundbite sure to fill the airwaves over the next weeks and months, as more and more banks are uncovered to be using this borderline criminal accounting gimmick to make their leverage ratios look better. This is the first time we have heard this loophole abuse by a bank, be it defunct (Lehman) or existing (everyone else). There should be an immediate investigation into how many other banks are currently taking advantage of this artificial scheme to manipulate and misrepresent their cap ratio, and just why the New York Fed can...