MarketWatch: Lehman 2.0 lurks on Wall Street

[marmar]

Is there a Lehman lurking on Wall Street?
Commentary: Banks still using accounting tricks, off-balance sheet deals

By David Weidner, MarketWatch


NEW YORK (MarketWatch) -- The bank-appointed examiner's report on Lehman Brothers Inc. shocked the public on its release two weeks ago. Who would believe a Wall Street firm would be so devious in attempting to hide the poisonous cancer on its balance sheet?

Well, every one of its rivals for starters. Repo 105, the accounting trick Lehman used to hide its leverage, may have been a Lehman-only phenomenon, but if you think it's the only way financial firms cook their books, get ready for Top Chef: Wall Street edition. See story on Wall Street's use of repurchase agreements.

Fast-and-loose accounting is a way of life on Wall Street, encompassing sleight of hand including off-balance sheet entities called special purpose vehicles, short-term repurchase agreements, securities that banks label "available for sale", and all varieties of "intent-based accounting." There are plenty of ways financial firms can massage the numbers to make them look more profitable, stable and solvent than they really are. .........(more)

The complete piece is at: http://www.marketwatch.com/story/is-your-bank-the-next-lehman-2010-03-30