"SEC investigating firms’ actions before the crisis; Agency’s chief calls for controls on derivatives" by Marcy Gordon, Associated Press | March 18, 2010
WASHINGTON — Lawmakers want to know if the sort of accounting gimmick that was used by the collapsed investment firm Lehman Brothers to mask billions in debt was widely employed on Wall Street....
Of course it was!
The 2008 Lehman Brothers Holdings Inc. bankruptcy, the biggest in US history, precipitated the financial meltdown that plunged the economy into the most severe recession since the 1930s.
After saddling itself with tens of billions of dollars’ worth of troubled assets that could not easily be sold, Lehman masked $50 billion in debt — along with its perilous financial condition — by using the so-called Repo 105 accounting gimmick, a bankruptcy examiner concluded last week....
The Lehman collapse “could be an even greater tragedy’’ than the multibillion-dollar swindle by money manager Bernard Madoff, Representative Jose Serrano, the New York Democrat who chairs the appropriations panel, suggested because it triggered events that threw millions of Americans out of work.
Yeah, Madoff is small fry now -- and he only ripped off his fellow Jews.
Questions are being raised about the supervision of Lehman by the SEC and the Federal Reserve.
What supervision?
“We’re working very hard at the SEC . . . to rebuild the agency’s credibility,’’ chairwoman Mary Schapiro told lawmakers.
You want to do that? Shut it down.
In March 2008, examiners from the SEC and the Federal Reserve Bank of New York began poring over Legman’s books. But the examiners “stood idle’’ while Lehman “engaged in the balance sheet manipulation,’’ Representative Spencer Bachus of Alabama, the Financial Service Committee’s senior Republican, charged at a hearing held by that panel to hear testimony from Federal Reserve chairman Ben Bernanke.
Business as usual.
After the meltdown, the SEC and Justice Department launched investigations of the financial services industry that are believed to include the insurer American International Group and the mortgage giants Fannie Mae and Freddie Mac, as well as Lehman. Few charges have been filed.
I'm not expecting any.
An autopsy of Lehman issued last week by bankruptcy examiner Anton Valukas could serve as a road map for the investigations, experts say. Schapiro said the report raised interesting points and would be helpful. She also renewed her call for Congress to regulate credit default swaps and other derivatives, saying that “it’s absolutely imperative’’ to bring transparency to the multitrillion-dollar worldwide market for the risky financial instruments.
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"SEC chief vows tighter oversight; Lawmakers look at how banks hid investment risks" by Alan Zibel, Associated Press | April 21, 2010
WASHINGTON — The chairman of the Securities and Exchange Commission yesterday pledged better oversight of the nation’s largest banks after criticism that the agency failed to spot accounting tricks at investment bank Lehman Brothers before it collapsed.
Chairman Mary Schapiro told a congressional panel that the agency has sent letters to 19 banks seeking information about whether they are using an accounting maneuver that a bankruptcy examiner said masked Lehman’s financial condition. The bank failed in September 2008 in the largest corporate bankruptcy in US history. Schapiro, who was not with the SEC at the time, said the agency is scrutinizing Lehman’s use of the maneuver, known as Repo 105, which allowed it to mask its weakness. Her testimony follows widespread criticism that the SEC failed to properly monitor Wall Street ahead of the recent recession, and after the agency filed civil fraud charges Friday against Goldman Sachs....
The bankruptcy examiner, Anton Valukas, criticized the company and the SEC....
In his report last month, Valukas disclosed that Lehman put together complex transactions that allowed the firm to sell securities — mainly those made up of mortgages — at the end of a quarter.
So EVERYONE was CUTTING UP TURDS and telling investors they were golden medallions, 'eh?
That wiped them off its balance sheet, avoiding the scrutiny of regulators and shareholders. Then the bank repurchased them, hence the term “repo.’’
Looks like a SHELL GAME to me.
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Related: U.S. Government Knew About Madoff Scheme Since 1960
