Bill Black and Eliot Spitzer on the Lehman fraud

[marmar]

Time for Truth: Three Card Monte is for Suckers
Tuesday, 03/16/2010 - 12:50 pm by Eliot Spitzer and William Black


Eliot Spitzer and William Black call for an immediate Congressional investigation of Lehman’s accounting deception and the release of relevant emails and internal documents.

In December, we argued the urgent need to make public A.I.G.'s emails and "key internal accounting documents and financial models." A.I.G.'s schemes were at the center of the economic meltdown. Three months later, a year-long report by court-appointed bank examiner Anton Valukas makes it abundantly clear why such investigations are critical to the recovery of our financial system. Every time someone takes a serious look, a new scandal emerges.

The damning 2,200-page report, released last Friday, examines the reasons behind Lehman's failure in September 2008. It reveals on and off balance-sheet accounting practices the firm's managers used to deceive the public about Lehman's true financial condition. Our investigations have shown for years that accounting is the "weapon of choice" for financial deception. Valukas's findings reveal how Lehman used $50 billion in "repo" loans to fool investors into thinking that it was on sound financial footing. As our December co-author Frank Partnoy recently explained as part of a major report of the Roosevelt Institute, "Make Markets Be Markets", such abusive off-balance accounting was and is endemic. It was a major cause of the financial crisis, and it will lead to future crises.

According to emails described in the report, CEO Richard Fuld and other senior Lehman executives were aware of the games being played and yet signed off on quarterly and annual reports. Lehman's auditor Ernst & Young knew and kept quiet. ..........(more)

The complete piece is at: http://www.dollarsandsense.org/blog/2010/03/black-and-spitzer-on-lehman-fraud.html (the piece follows a brief intro)

[slipslidingaway]

1. knr before this gets lost. n/t

[Bozita]

2. Good find! Thank you. Recommended.

[marmar]

3. You're welcome.

[malaise]

4. Fuld should be on his way to prison

The thing is that it looks as though all the big banks used this model which means lots of people should be on their way to prison

[McCamy Taylor]

5. Big K&R Important story that the corporate media is gonna bury deeper than Jimmy Hoffa.