Lehman Brothers Scandal Rocks the Fed

[Crewleader]

March 15, 2010

Geithner and Bernanke's Possibly Criminal Roles

Lehman Brothers Scandal Rocks the Fed

By MIKE WHITNEY

After a year-long investigation, court-appointed bank examiner Anton Valukas has produced a deadly 2,200 page report which details the activities that led to the Lehman Brothers bankruptcy. The report is a keg of dynamite. The question now is whether anyone in government has the nerve to light the fuse. Valukas provides powerful evidence that Lehman executives were involved in “balance sheet manipulation” by implementing an arcane accounting procedure called “Repo 105” which masked the bank's true financial condition from investors and regulators.

According to Valukas, Lehman was “Unable to find a United States law firm that would provide it with an opinion letter permitting the true sale accounting treatment" using Repo 105. So, Lehman executives went outside of the country in an effort to enlist the support of a London law firm that would approve the procedure.

It is impossible to overstate the significance of Valugas's findings. The report exposes the opaque but central role of the repo market which provides essential short-term loans for financial institutions. (Lehman used repos to conceal the full extent of its collapse, by dint of the amount of leverage it was using, meaning the pitiful asset anchor tethered to a vast zeppelin of debt) More importantly, it shows the cozy and, very probably criminal relationship between the country's main regulatory bodies and the Wall Street behemoths. The activities of the New York Fed (NYFRB), which at the time was headed by Timothy Geithner, is particularly suspect in this regard. The report should trigger an immediate Congressional investigation, probing the whole affair and most importantly the role of the Fed.

http://www.counterpunch.org/whitney03152010.html

[rfranklin]

1. Can we get rid of Geithner now?

What was President Obama thinking?

[HillbillyBob]

3. While I was not expecting much

At least he could have hired knowledables instead of retreads from Clinton and Bush admins and also fried (well type I mean fired) ever bush appointee that got their mbas from liberty and regents.

[Beam Me Up]

4. Do you really think he (Obama) had a choice? I don't.

Can any President of the United States act independently of and in opposition to the criminals who are in control of our financial sector (or the Corporate/Banking/Military Industrial Complex in general)? I believe the grim answer to that question is an obvious and resounding 'NO'! At this point in our history, Presidents are more 'PR' than anything else. I think this has been true for a long time but glaringly so with the 'selection' of W that was necessary to get us deeply into this mess. Now a different face, a more popular, liberal and intelligent face, a seemingly more 'hopeful' face, has been put in front of the camera. But what has changed, really? Not much. And this isn't because Obama is a 'bad' man or President but because the real power that shapes policy is no longer representative of the will of the people. Instead, that will has to be placated, manipulated and distracted in a sort of 'media circus' that keeps us believing that our Constitutional Republic is still functioning as it should. It isn't and it hasn't for over a decade now. IMO, anyway.

[aquart]

5. What a pathetic excuse.

[westerebus]

9. + 100

[glitch]

6. Agreed. And it's a reason not an excuse (they aren't the same thing). nt

[formercia]

2. The crooks were beating down the door trying to get on the Administration

so they could kill any investigation that might arise. Timmeh knew what was coming.

[Cassandra]

7. I was thinking the same thing.

I read that Geitner and Obama got along well after they had met. I'm sure Timmy was as ingratiating as possible.

[formercia]

8. Keep your friends close

and your enemies even closer.

[aquart]

10. He had a lot to lose.

So did all his special friends.