Att Grekerna ägnat sig åt kreativ bokföring med hjälp av sina kompisar på Goldman Sachs känner väl nästan alla till vid det här laget. Nu börjar det sippra fram information om hur Lehman Brothers lyckades undanhålla sin gräsliga balansräkning för investerare och motparter.
I vad som kallats ‘Lehmangate’ framgår det att Lehman använde sig av tvivelaktiga, eller kanske tom brottsliga, bokföringsknep (repo 105) för att snygga till balansräkningen inför varje kvartalsrapport. Inte nog med det, det verkar dessutom som om USAs finansminister Tim Geithner var högst medveten om situationen.
Hittade följande artikel som beskriver situationen:
Repo 105 is LEHMANGATE: Systematic Fraud and Geithner Knew About It
You’ll see that Geithner was unequivocally involved with knowledge about Repo 105, LEHMANGATE. But the real question is, at what point in time did Obama know? And if Obama did not know, then he’s unworthy to be President because it means he lacks the political strength, depth and experience demanded by the job (what did he run before being elected?). I believe we are watching another “Watergate” unfold. The difference between then and now is that we may not have political leaders in Congress who are willing to do what’s required to make the full truth known.
I finally spent some time dissecting exactly what Lehman did and how they got away with what they were doing. Let me say this: If all of Lehman’s upper management PLUS the relevant Ernst&Young people PLUS the relevant people at the NY Fed – including Tim Geithner – do not do jail time over this, it’s time to either start organizing a revulotion or move out of the country. If these guys get away with this without serious legal and financial punishment, it is the clearest indication that our country is no longer held accountable by the Constitution OR Rule of Law in any respect. It means that full-scale mob-style criminality has invaded every aspect of our Banking, Corporate and Government systems, starting at the top with the White House and Congress.
Just to summarize briefly and coherently what Lehman did: Lehman engaged in repo transactions which, at the surface appeared to be standard repo maneuvers used by banks to raise short term financing by taking Treasury securities and sending them to a counterparty, who takes the Treasuries as collateral and gives Lehman cash to use on a short term basis – usually overnight to two weeks. Lehman then unwinds the repo by sending the cash plus a little more – representing interest paid on the transaction – back to the lending entity and the lender sends back the Treasury collateral back to Lehman. The transaction is accounted in a way which does not change any aspects of Lehman’s balance sheet for accounting, regulatory and financial purposes.
What Lehman did is exploit a rule that says if Lehman sends collateral representing 105% of the cash they borrow, under accounting regulations, Lehman can account for the transaction as a “sale of securities” and use the cash taken in to repay other short term debt, making Lehman’s balance sheet looking less leveraged – i.e. of much higher quality – to regulators and investors at the end of each quarter. As Lehman approached bankruptcy, it started including risky, worthless securities as part of the “repo” collateral package – toxic assets that Lehman could not get off its balance sheet at any price. Using this type of collateral is unconventional in the extreme and could NEVER be considered a “sale” of securities under any non-fraudulent accounting ruling. NEVER.
The Treaury collateral Repo 105 would be okay if it were done once or twice, but Lehman did it repeatedly and systematically every quarter since at least 2007. Anyone with an accounting 101 background from a good school knows that Ernst&Young should have raised a red flag and disallowed the treatment of the transaction as a “sale” the second time Lehman used it. Afterall, doing this once without reversing the transaction could for sure be considered a bona fide sale. Maybe even with the reversal (the unwind of the repo). But to engage in this systematically and serially every quarter would raise an objection over the accounting treatment as “sale” and any accounting firm doing its job properly and ethically would not sign off on the accounting treatment. This is especially true once Lehman started using toxic waste as collateral. Clearly pure manipulative fraud.
To think that E&Y did not know any better is to ask us to believe that the E&Y people either are complete idiots or do not know accounting rules. Stupidity and ignorance notwithstanding, we can only conclude this situation was pure nefarious intent to fraud in which E&Y participated. Remember Arthur Anderson/Enron if you think this is not probable.
In fact, just this morning, clusterstock.com has posted an article from Andrew Ross Sorkin who says that the SEC and the Federal Reserve Bank of NY (Tim Geithner’s NY Fed) were all over Lehman during the heart of the “Repo 105″ period.
Almost two years ago to the day, a team of officials from the Securities and Exchange Commission and the Federal Reserve Bank of New York quietly moved into the headquarters of Lehman Brothers. They were provided desks, phones, computers — and access to all of Lehman’s books and records. At any given moment, there were as many as a dozen government officials buzzing around Lehman’s offices.
These officials, whose work was kept under wraps at the time, were assigned by Timothy Geithner,then president of the New York Fed, and Christopher Cox, then the S.E.C. chairman, to monitor Lehman in light of the near collapse of Bear Stearns.
What this tells us is that not only are all of the Lehman’s upper management AND the E&Y people involved are guilty of direct fraud and corruption, but that everyone from the NY Fed and the SEC who were involved either were complete idiots with respect to basic accounting rules and reguations (and should be fired immediately with no pension benefits) OR that they enabled the fraud to persist by looking the other way. This would include Tim Geithner, who should no longer be given the benefit of using the “I can’t recall” or the “I had no idea” defense. He is clearly knee-deep in this. Geithner’s motivation to look the other way would be to keep the market from seeing the extent of Lehman’s insolvency.
PLEASE KEEP IN MIND THAT LEHMAN CEO RICHARD FULD WAS A MEMBER OF THE BOARD OF DIRECTORS OF THE NY FED AT THIS TIME AND THUS HAD DIRECT INFLUENCE OVER GEITHNER.
For starters I would call on Obama to force Geithner to either resign from his Treasury position or outright fire him. Fool us twice – cheating on taxes and getting away with it plus his story about not knowing about AIG/Goldman – shame on us. Fool us again, time to impeach Obama unless he gets rid of Geithner immediately.
Clearly, upon examining all of the evidence and connecting the dotted lines, Lehman committed Enron-esque fraud with its Repo 105 maneuvers and was aided and abetted by its accountant, Ernst & Young and by Federal Reserve officials, at the time, specifically Tim Geithner. At the very least all of the upper executive management team at Lehman, the board of directors at Lehman, all relevant professionals and senior management at E&Y should eventually be under indictment. I would settle for the forced resignation of Geithner, but he should be thoroughly investigated and indicted as well. Don’t hold your breath for this, recall that current Attorney General Eric Holder is the guy who wrote the pardon letter for Marc Rich that Bill Clinton signed just before leaving the White House. Holder is no stranger to the enablement of criminal activity and tax evasion.
I’m starting to wonder if gold’s unusual relative strength in the face of the aggressive, unmitigated manipulation attempts to get it lower over the past month is a signal that Lehman’s fraud is just the tip of the iceberg. Ernst & Young signed off on a balance sheet accounting maneuver that was clearly and unequivocally illegal. Even an accounting 101 student could make that determination. It leads one to wonder “what the hell else is hiding in Wall Street’s accounting closet that is being approved by our “trusted” accounting firms and ignored or enabled by the Fed? We know that Goldman is involved in all kinds of non-transparent, at a minimum unethical, and likely fraudulent OTC derivatives activities. They roll out their 10-K every quarter with their accountant’s stamp of approval and Lloyd “I’m God” Blankfein smiling and pontificating at how great Goldman is at making profits and managing risk. But what is really going on behind the curtain. And even worse, to what extent are Bernanke, Geithner and even Obama aware of just how fraudulent and corrupt everything is on Wall Street – and the manner of accounting for it?
And now we have Banana Ben begging Congress, and the public, to sign-off on handing even MORE oversight and regulatory responsibilities to the Fed. Just today Bernanke is making the case that “the Fed’s ‘wide range of expertise’ makes it ‘uniquely suited to supervise large, complex financial organizations and to address both safety and soundness risks and risks to the stability of the financial system as a whole’” Bloomberg link.
Set aside the fact that Bernanke never saw the housing bubble, mortgage bubble, toxic asset bubble, banking system collapse – his “uniquely suited” oversight abilities cost the Taxpayers of this country trillions. Let’s examine Bernanke’s statement in the context of Lehmangate and Repo 105.
Where was Bernanke’s oversight abilities while his team was in Lehman’s office for two years with full access to all books and records? Let me quote again from Andrew Ross Sorkin’s statement yesterday:
Almost two years ago to the day, a team of officials from the Securities and Exchange Commission and the Federal Reserve Bank of New York quietly moved into the headquarters of Lehman Brothers. They were provided desks, phones, computers — and access to all of Lehman’s books and records. At any given moment, there were as many as a dozen government officials buzzing around Lehman’s offices (link in the post below).
The Fed WAS in a position of unfettered and direct oversight at Lehman for two years leading up to Lehman’s collapse and yet Lehman still pulled off massive fraud – right under your nose, Ben. Either you are a complete moron or you are a psychopathic liar. Which one is it Ben?
Now that Lehman has collapsed under a massive weight of fraud and corruption – and all of surviving Wall Street was allowed to feed greedily, with the help of TARP, off the carcass, the real question is just how much fraud is being currently covered up and papered over? It would seem to me that after Enron, and the ensuing series of massive, ever-larger financial collapses that have occurred (Refco,Bear Stearns, AIG, Fannie Mae, Freddie Mac, GMAC, etc), that our political leaders and those charged with regulations and oversight, including the Fed, would be interested in cleaning up this mess and putting those who created and participated in this mess in jail.
Will this ever happen? Not if the Fed is given greater powers, not if Geithner and Larry Summers remain in the White House and not if the current crooks leading Congress are allowed to remain in power. At the margin, it’s up to the public to do something about this. If we allow this to continue, the problems will only grow larger and the U.S. will eventually collapse under the sheer weight of too much debt and fraud. Otherwise, I hope everyone who understands this is accumulating as much gold and silver as they can.
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