The Daily Caller
3/12/2010
A new report is out by the bank examiner hired by Lehman Brothers to assess the reasons for the financial company’s collapse and the final product is not pretty.
The New York Times reports:
“But the examiner, Anton R. Valukas, also for the first time, laid out what the report characterized as ‘materially misleading’ accounting gimmicks that Lehman used to mask the perilous state of its finances. The bank’s bankruptcy, the largest in American history, shook the financial world. Fears that other banks might topple in a cascade of failures eventually led Washington to arrange a sweeping rescue for the nation’s financial system.
According to the report, Lehman used what amounted to financial engineering to temporarily shuffle $50 billion of troubled assets off its books in the months before its collapse in September 2008 to conceal its dependence on leverage, or borrowed money. Senior Lehman executives, as well as the bank’s accountants at Ernst & Young, were aware of the moves, according to Mr. Valukas, the chairman of the law firm Jenner & Block and a former federal prosecutor, who filed the report in connection with Lehman’s bankruptcy case.”
There’s another angle that the New York Times chose not to cover. Naked Capitalism notes that the NY Fed during the ‘financial misbehavior’ was being run by current Treasury Secretary Timothy Geithner…
The article continues at The Daily Caller.
UPDATE: Read also, “London at centre of Lehman Brothers ‘accounting gimmick’ ” at the Telegraph of London.
