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Bank Of America And Citi Found To Have Used Fraudulent Repo 105-Like Transactions "Due To Error"
The WSJ reports that, as broadly expected, Lehman is not alone in its illegal Repo 105 window-dressing scam: it turns out that Citigroup and Bank Of America also routinely used such shady practices for years. As Michael Rapoport reports, "Citigroup said the misclassified transactions-of $5.7 billion as of the end of 2009, and as much as $9.2 billion over the past three years-involved "a very limited number of our business units" that "used this type of transaction in very small amounts." So its all good - fraud may have been performed but it was just nickel and diming: after all it's not like Citigroup was robbing cemeteries or anything (and since guilt was neither admitted nor denied in that specific case, one can say Citi was never sleeping because it was robbing graveyards but only due to honest mistake). Sure enough, this disclosure come only after the SEC demanded clarification on Repo-105 comparable transactions at all major firms. And with such daily distractions as ten trillions point swings in the market, and crude oil filling up the world ocean, who really cares anymore that all US banks commit fraud on a daily basis. The punchline: "Bank of America and Citigroup say their misclassifications were due to errors--not an attempt to make themselves look less risky." Well, that surely justifies everything.
Bank of America Corp. (BAC) and Citigroup Inc. (C) incorrectly hid from investors billions of dollars of their debt, similar to what Lehman Brothers Holdings Inc. did to obscure its level of risk, company documents show.
In recent filings with regulators, the two big banks disclosed that over the past three years, they at times erroneously classified some short-term repurchase agreements, or "repos," as sales when they should have been classified as borrowings. Though the classifications involved billions of dollars, they represented relatively small amounts for the banks.
A bankruptcy-court examiner said Lehman had been doing the same thing to make its balance sheet look better before it filed for bankruptcy in September 2008, using a strategy dubbed "Repo 105" that helped the Wall Street firm move $50 billion in assets off its balance sheet.
Bank of America and Citigroup say their misclassifications were due to errors--not an attempt to make themselves look less risky, which examiner Anton Valukas said was Lehman's motivation. The disclosures, made after federal securities regulators began asking financial firms about their repo accounting, were included in quarterly filings earlier this month but not highlighted.
The disclosures come amid a series of revelations about how banks obscure their risk-taking before reporting their finances to the public, a practice known in the financial world as "window dressing."
Federal securities rules bar financial firms from intentionally masking debt to deceive investors. There is no indication that Bank of America or Citigroup misclassified their repos intentionally or that the Securities and Exchange Commission will take any action against them. An SEC spokesman declined to comment.
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Criminial prosecution predictor:
0.0
If you or I juice our books, we go to jail. If they do it, they get taxpayer funded bonuses.
Yeah, we just need to get over it, give em all the money and move on.
Is there a US Justice Dept. anymore?
Wait...
Ain't it under tha Treasury Dept?
Amerika has become absolutely kleptacular! Top to bottom.
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"a kiddie shenanigan" Come on we are talking about corrupted adults!
"Well, you see, I didn't mean to sleep with her. I was walking across her bedroom while naked, and I tripped."
The dog ate my balance sheet...
You forgot:
"I swear honey, I pulled out"
I fell on the doobie, it lit itself from the friction and I did not inhale
David Berkowitz made me do it...
The check was in the mail.
I was only attempting to scare those kids and had exactly calculated the trajectory of the AR-15 burst. But due to freak wind sheer they all died. It was the fault of calculation error!
/////
Well since Citi and BoA are US owned subs and the Sun shines out of both a-holes as a result, they are God's own gift to US. Be grateful.
What a Blessing! Again, harder, please more, Again!
/////
/yeah, sarcasm off/ as if
What steps have been taken to prevent these errors from happening again, and how was it that the same errors happened systemically?
I'm kidding of course, if Citi says NBD, then NBD.
Aren't the executives criminally liable under SOX though?
FULL WALL STREET CRIMINAL ELEMENTS:
http://williambanzai7.blogspot.com/2010/05/banzai7-periodic-table-of-wal...
LOL
That was well done!
Is nutjobium Apostate? If so hilarious.
+US Defecit! +Swapium
Derangium and Moron...hahahahaha
Who is the sidekick? >>> Derangium!
such bullshit
BAC: oooohhhhh.You meant those 105's. Our bad
Banks operate with impunity and immune to laws. Walk between the raindrops bitches.
Tiptoe through the tulips.
Coffee is only $8.50
"It appears to have been a completely honest bureaucratic snafu."
Oh come on, its not like their accountants are professionals or anything.
One thing i always wondering in my accounting classes was why we are taught how to manage earnings. All those CAs, CPAs, CGAs, etc; graduating with skills on what NOT to do in an ideal world. Yet then they come into the real world, far from ideal.. of course they're going to help firms manage earnings! Otherwise back office finance could balance income statements and the like.
Your comment reminds me of my college accounting class.
I went to school in Virginia. The instructor kept talking about an Extraordinary Repayer. I didn't have a clue what she was talking about. I raised my hand and asked, "What is an Extraordinary Repayer?" She laughed and wrote it on the Board: Extraordinary Repair.
Now I know that there really is an Extraordinary Repayer, it's called a Repo 105 Transaction.
What was his perfered extraordinary repair? Put extra thick oil in the economic engine and mark it like it's rebuilt? Becuase if that wasn't the answer. He doesn't know "modern accounting".
http://www.lolfail.com/wp-content/uploads/2009/05/fail-helicopter-ride.jpg
Well, yeah its an error -- especially now that our buddy got busted for that same thing.
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I can understand how it could be an honest error.
These repo whatsits are complicated. Wall Street would be unfairly burdened if they had to hire lots of people smart enough to understand repos. Think of the cost! And the time!
Shame on the SEC for stifling the efforts of honest Americans to earn an honest dollar. Shame!
A capital crime! Waste waste waste...
fine. small potatoes.
the problem is that the whole sack is rotten.
who were the auditors this time around?
They were Kiting
"honest mistake?" all mistakes are honest
is it "window dressing" or cross dressing?
Accidentally and without realising moved billions of dollars on and off the balance sheet, coincidentally timed to around the same times as end of quarters and just fortuitously having the effect of making the company look financially stronger than it really way.
I can certainly believe it was just a simple bureaucratic error.
And the fact that it happened again and again just goes to prove what a simple error it was to make
The SEC should issue a public apology to C and BAC for even thinking that Repo-105 type transactions could be used in those honored institutions to mislead investors.
On your knees, Mary Schapiro, on your knees.........
Fuck the SEC and all regulators who REFUSE to do their appointed duties.
Burn these fuckin banks and get it over with already.
I remember Enron was simply made accounting "errors."
The SEC had time to do some work? Their internal porn server must be down.
Shocked....shocked, I say
Whats the formal term for the mens rea of "oops, my bad"? Oh yes, "gross incontinence."
Quick, someone check the statutes and see if gross incontinence is the appropriate mens rea for fraud.
Whatever happened to preventative controls, shit, what happend with SOX anyway? It does not look so bad anymore.
Wasted years on that shit.
Angry, angry, angry
...and like the countless other fraudulent cases C has been involved in-the news headlines will come out "Citigroup has agreed to pay a fine of "x" amount of dollars and admit no wrongdoing"...honestly, given how much C is govt. owned, I don't think anything will come out of it....though I hope something does.
BAC? Not too much more either...
Such b.s.-just sickening...
imagine dunpsters complete surprise .. fradulent ,,
really a little rounding error and misplaced forms
The only way to restore any market confidence would be to charge the top ten people in each of these firms under both RICOA and Sarbanes, clawback the personal fortunes with fines and treble damages, along with imprisonment.
When's that happening.
That ongoing buying support I detected has morphed into a rally...
http://stockmarket618.wordpress.com
http://www.zerohedge.com/forum/latest-market-outlook-1
Dear GS: Why are you putting this garbage under a totally unrelated article and pissing off everyone?
Is this like being a little bit pregnant?
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