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The "Repo 105" Scam: How Lehman Fooled Everyone (Including Allegedly Dick Fuld) And How Other Banks Are Likely Doing This Right Now

Tyler Durden's picture


Presenting a detailed look at "Repo 105" - the next soundbite sure to fill the airwaves over the next weeks and months, as more and more banks are uncovered to be using this borderline criminal accounting gimmick to make their leverage ratios look better. This is the first time we have heard this loophole abuse by a bank, be it defunct (Lehman) or existing (everyone else). There should be an immediate investigation into how many other banks are currently taking advantage of this artificial scheme to manipulate and misrepresent their cap ratio, and just why the New York Fed can claim it had no idea of this very critical component of the Shadow Economy.

From the report:

Lehman employed off-balance sheet devices, known within Lehman as “Repo 105” and “Repo 108” transactions, to temporarily remove securities inventory from its balance sheet, usually for a period of seven to ten days, and to create a materially misleading picture of the firm’s financial condition in late 2007 and 2008. Repo 105 transactions were nearly identical to standard repurchase and resale (“repo”) transactions that Lehman (and other investment banks) used to secure short-term financing, with a critical difference: Lehman accounted for Repo 105 transactions as “sales” as opposed to financing transactions based upon the overcollateralization or higher than normal haircut in a Repo 105 transaction. By recharacterizing the Repo 105 transaction as a “sale,” Lehman removed the inventory from its balance sheet.

Lehman regularly increased its use of Repo 105 transactions in the days prior to reporting periods to reduce its publicly reported net leverage and balance sheet. Lehman’s periodic reports did not disclose the cash borrowing from the Repo 105 transaction – i.e., although Lehman had in effect borrowed tens of billions of dollars in these transactions, Lehman did not disclose the known obligation to repay the debt. Lehman used the cash from the Repo 105 transaction to pay down other liabilities, thereby reducing both the total liabilities and the total assets reported on its balance sheet and lowering its leverage ratios. Thus, Lehman’s Repo 105 practice consisted of a two-step process: (1) undertaking Repo 105 transactions followed by (2) the use of Repo 105 cash borrowings to pay down liabilities, thereby reducing leverage. A few days after the new quarter began, Lehman would borrow the necessary funds to repay the cash borrowing plus interest, repurchase the securities, and restore the assets to its balance sheet.

Lehman never publicly disclosed its use of Repo 105 transactions, its accounting treatment for these transactions, the considerable escalation of its total Repo 105 usage in late 2007 and into 2008, or the material impact these  transactions had on the firm’s publicly reported net leverage ratio. According to former Global Financial Controller Martin Kelly, a careful review of Lehman’s Forms 10?K and 10?Q would not reveal Lehman’s use of Repo 105 transactions. Lehman failed to disclose its Repo 105 practice even though Kelly believed “that the only purpose or motive for the transactions was reduction in balance sheet;” felt that “there was no substance to the transactions;” and expressed concerns with Lehman’s Repo 105 program to two consecutive Lehman Chief Financial Officers – Erin Callan and Ian Lowitt – advising them that the lack of economic substance to Repo 105 transactions meant “reputational riskto Lehman if the firm’s use of the transactions became known to the public. In addition to its material omissions, Lehman affirmatively misrepresented in its financial statements that the firm treated all repo transactions as financing transactions – i.e., not sales – for financial reporting purposes.

And here is the Fed punchline, as it once again implicates Tim Geithner:

From 2003 to 2009, Treasury Secretary Timothy Geithner served as President of the Federal Reserve Bank of New York (“FRBNY”). The Examiner described to Secretary Geithner how Lehman used Repo 105 transactions to remove  approximately $50 billion of liquid assets from the balance sheet at quarter-end in 2008 and explained that this practice reduced Lehman’s net leverage. Secretary Geithner “did not recall being aware of” Lehman’s Repo 105 program, but stated: “If this had been a bank we were supervising, that [i.e., Lehman’s Repo 105 program] would have been a huge issue for the New York Fed.”

And even though the Fed should have been fully aware of any shadow transaction be they "matched book" repos or the "105 variety, nobody had any clue. Just who the hell was regulating banks???

Jan Voigts, who was an Examining Officer in FRBNY’s Bank Supervision Department, had no knowledge of Lehman removing assets from its balance sheet at or near quarter-end via a repo trade treated as a true sale under a United Kingdom opinion letter.

Arthur Angulo, who was a Senior Vice President in FRBNY’s Bank Supervision department, likewise was unaware that Lehman engaged in repo transactions at quarter-end, under a United Kingdom true sale opinion letter, where the assets would be returned to Lehman’s balance sheet following the end of the reporting period. Angulo said that the described repo transactions appeared to go “beyond other types of [permissible] balance sheet management." Angulo also said that he would have wanted to know about off-market transactions where Lehman accepted a higher haircutthan a repo seller normally would accept for a certain type of collateral.

Thomas Baxter, FRBNY General Counsel, had no knowledge of Repo 105 transactions, either by name or design. Baxter was generally aware of firms using quarter-end and month-end “balance sheet window-dressing,” but did not recall this being an issue linked to Lehman specifically.

Stunningly, nobody at the SEC was aware of Lehman's Repo 105 program. And guess what: NEITHER DID DICK FULD. This is unbelievable - the criminality reaches to the very top, yet the very top denies all knowledge.

Richard Fuld, Lehman’s former Chief Executive Officer denied any recollection of Lehman’s use of Repo 105 transactions. Fuld said he had no knowledge that Lehman treated any kind of repo transaction as a true sale or that Lehman ever removed from its balance sheet assets transferred in a repo transaction. In addition, Fuld did not recall having seen any reports referencing the amount of the firm’s Repo 105 activity. Fuld further stated that he did not know that Lehman removed approximately $49 and $50 billion in inventory off its balance sheet at quarter-end
through the use of Repo 105 transactions in first quarter 2008 and second quarter 2008, respectively. Fuld said, however, that if he had learned that Lehman was temporarily cleansing its balance sheet of assets at quarter-end through Repo 105 transactions, it would have concerned him.

Evidence, however, suggests that Fuld is blatantly lying:

Fuld’s denial of recollection must be weighed by a trier of fact against other evidence. Fuld recalled having many conversations with his executives about reducing net leverage and emphasized to the Examiner how important it was for Lehman to reduce its net leverage. The night before the March 28, 2008 Executive Committee meeting, Fuld received materials for the meeting, including an agenda of topics including “Repo 105/108” and “Delever v Derisk” and a presentation that referenced Lehman’s quarter-end Repo 105 usage for first quarter 2008 – $49.1 billion.  The materials also were forwarded by Fuld’s assistant to other Lehman executives. It appears that Fuld did not attend the March 28 meeting, but Bart McDade recalled having specific discussions with Fuld about Lehman’s Repo 105 usage in June 2008. Sometime that month, McDade spoke to Fuld about reducing Lehman’s use of Repo 105 transactions. McDade walked Fuld through the Balance Sheet and Key Disclosures document (reproduced in part below) and discussed with Fuld Lehman’s quarter-end Repo 105 usage – $38.6 billion at year-end 2007; $49.1 billion at first quarter 2008; and $50.3 billion at second quarter 2008.

Based upon their conversation, McDade understood that “Fuld knew, at a basic level, that Repo 105 was used in the firm’s bond business” and that Fuld “was familiar with the term Repo 105.”3524 McDade recalled that when he advised Fuld in June 2008 that Lehman should reduce its Repo 105 usage to $25 billion, “Fuld understood that this would put pressure on traders.”3525 McDade also recalled that “Fuld knew about the accounting of Repo 105."

Combing through the Appendix on what collateral was actually "sold" (only to be promptly bought back) in Repo 105s:

Most securities Lehman used in Repo 105 transactions were “governmental” in nature, implying a certain level of liquidity. While representing a relatively small percentage of Lehman’s total Repo 105 assets/securities, at times the nominal amount of non-”governmental” securities Lehman used in Repo 105 transactions was quite large. For example, as of February 29, 2008 (the end of Lehman’s first quarter 2008), Lehman utilized over $1 billion of highly structured securities, i.e., CLOs and CDOs, private RMBS, CMBS and asset-backed securities, in Repo 105 transactions. In the market environment that existed for Lehman in early 2008, these structured securities were likely relatively illiquid as indicated by declines in origination volumes, wider bid-offer spreads, and higher margin requirements.

In August 2008, just before it was over, the firm allowed $55 million, or seven securities, rated CCC to be included in a Repo 105 transaction.

The next chart makes it evident it that 105s were used simply to game the firm's assets into quarter end (yellow highlights), by reducing overall asset for leverage ratio calculations.

That this scam was going unsupervised (just who the hell were the counterparties?) for many years, and that many banks are likely using it right now to fool investors, regulators, rating agencies, and the idiots at the FRBNY (who certainly also know about this), is beyond criminal. Yet that nobody will go to jail for this is as certain as the market going up another 10% tomorrow. A full investigation has to be conducted immediately into whether existing Wall Street firms, and in particular those who use Ernst & Young as auditors, are currently abusing public confidence via such transactions.

Full report

Repo 105


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Thu, 03/11/2010 - 19:01 | 262456 Strom
Strom's picture

The full report available here:

Thu, 03/11/2010 - 21:57 | 262658 jbcorwin
jbcorwin's picture

Thank you!

Tue, 05/17/2011 - 01:59 | 1282110 Karston1234
Karston1234's picture

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Sat, 07/09/2011 - 01:00 | 1439182 mediahuset
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Thu, 06/30/2011 - 03:13 | 1414699 mediahuset
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Fri, 03/12/2010 - 00:01 | 262815 i.knoknot
i.knoknot's picture

so... on these fridays, when the FDIC 'receives' a bank and states:

  assets     = $100M

  liabilities = $100M

  cost to FDIC to cover = $50M ...

Is this where that $50M has been hiding?, or is it still in the FASB mark-to-myth, or both or ?

Mon, 04/04/2011 - 03:24 | 1131539 jessiejune
jessiejune's picture

these Friday is really an wonderfull time and we should have many fun here and there just like Maize Mill.

Fri, 03/12/2010 - 00:47 | 262855 John Self
John Self's picture

Note to all:  More Lehman fun coming by Monday, when they will need to file a plan of reorganization, or else cede control to any Tom, Dick or disgruntled shareholder out there.  Look for them to file a pro forma version for now and do their best to maintain control for the next few months until a more credible version can be hammered out.  But in any case, we might just see who's in the estate's crosshairs and whether there's any real hope of reorganization for any of the units (you'd think not, but there have been some statements to the contrary).

Fri, 03/12/2010 - 03:23 | 262985 i.knoknot
i.knoknot's picture

is that why this news is suddenly available now?

are we just being 'worked' here?

"there are no accidents"

    - ally - st elmos fire - a long time ago...

Fri, 02/25/2011 - 22:21 | 998848 niccy4513
niccy4513's picture

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Thu, 03/11/2010 - 19:02 | 262458 Ned Zeppelin
Ned Zeppelin's picture

Hilarious hijinx.  Repo 105. Like hearing about credit default swaps for the very first time.

Fuld = liar.  Geithner = liar. 

Puh-leze, guys, you insult us with your denials.

Thu, 03/11/2010 - 19:34 | 262497 Careless Whisper
Careless Whisper's picture

Ken Fuld has a bad memory plus Ernst & Andersen said the 10-K's were AAA-okay.

Thu, 03/11/2010 - 21:20 | 262617 Howard_Beale
Howard_Beale's picture

Ken Fuld- I hardly knew you.

--Dick Lewis

Thu, 03/11/2010 - 21:41 | 262648 bugs_
bugs_'s picture

+1 Ernst & ANDERSON!!!!! LOL

Thu, 03/11/2010 - 22:51 | 262739 hedgeless_horseman
hedgeless_horseman's picture

Please do not use the term "auditors" to describe Ernst & Young.  There must be a better word.  How about co-conspirators?  I don't know, call Rupert Murdoch. He is brilliant at this sort of thing.

Fri, 03/12/2010 - 01:24 | 262886 Anonymous
Anonymous's picture

co-conspirators works as does boiler room

Fri, 03/12/2010 - 09:57 | 263119 Cognitive Dissonance
Cognitive Dissonance's picture

You make an important point. Why would anyone believe any party to the Ponzi is honest or truthful? Because they're supposed to be? Then explain to me the FDIC, FINRA, SEC, the FED and so on. If the Ponzi requires all parts to function as expected in order for the Ponzi to succeed and the Ponzi is clearly succeeding (at least for now) then all parties of the Ponzi are dishonest.

Auditors are no different from anyone else. They have the need to find and retain clients, be profitable and not make too many waves if they wish to stay in business. They know which side of their bread is buttered. Since no one has gone to jail or even suffered much beyond public disclosure and a little humiliation, what makes anyone think the auditors are not corrupt when the auditors were signing off on this shit years before the roof collapsed?

Fri, 03/12/2010 - 10:55 | 263154 trav7777
trav7777's picture

FRNbugs may not want to hear it, but it's as I've said:  we are facing an existential crisis in paper where there's a discontinuity moment coming in which confidence undergoes a phase change.

People are waking up to realize that it's all bullshit...all of it. 

Fri, 03/12/2010 - 11:04 | 263165 Cognitive Dissonance
Cognitive Dissonance's picture

"People are waking up to realize that it's all bullshit...all of it." 

Agreed. And this is precisely why nearly everyone is frozen in place. Sort of like that half dream, half reality moment when you're beginning to awaken from a long and deep sleep. You're not sure what is real and what is dream. Consciousness (more accurately the ego) is beginning to take over but the dream world is very seductive and alluring.

In the dream world, the nation can endlessly spend and still lower taxes, where house prices always go up and credit card limits increase, where you can replace you car every 2-3 years and it would be nice to have that fourth flat screen TV. The rabbit hole is endlessly deep but only if the public chooses to ignore reality.

Fri, 03/12/2010 - 14:00 | 263411 cougar_w
cougar_w's picture

Reality is what you make of it.

We started down this rabbit hole in 1913. Manufacturing reality is old hat these days.

Fri, 03/12/2010 - 17:51 | 263705 Anonymous
Anonymous's picture

and it needs to stop now! So are those of us still in the hole with our 401K's going to be made whole or is misleading
investors OKy Doky these days?

Fri, 03/12/2010 - 17:57 | 263709 Anonymous
Anonymous's picture

and it needs to stop now! So are those of us still in the hole with our 401K's going to be made whole or is misleading
investors OKy Doky these days?

Fri, 02/25/2011 - 22:23 | 998852 niccy4513
niccy4513's picture

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Thu, 03/11/2010 - 23:54 | 262805 jEnron
jEnron's picture

Geithner stepping down at Treasury.  Obama nominating Captain Renault to replace him.

Better yet, make Andy Fastow this generation's Joe Kennedy.


Fri, 03/12/2010 - 10:01 | 263122 Anonymous
Anonymous's picture

and Martin Armstrong for vice chair of the Fed.

Thu, 03/11/2010 - 23:54 | 262806 jEnron
jEnron's picture



Thu, 03/11/2010 - 19:06 | 262463 AnonymousMonetarist
AnonymousMonetarist's picture

How the hell is this not fraudulent conveyance?

Thu, 03/11/2010 - 19:48 | 262524 Anonymous
Anonymous's picture

This looks shady under rules governing misleading financials, prospectuses, etc.

However, a fraudulent conveyance requires that Lehman was disposing of assets at below fair market value to harm creditors. If anything, Lehman was "selling" trash assets at inflated prices.

If Lehman was in bankruptcy, the use of the "repo" proceeds to pay particular creditors could be challenged as a preferential payment. I think you are confusing the preferential payment rules with the fraudulent conveyance rules.

Fri, 03/12/2010 - 10:53 | 263151 AnonymousMonetarist
AnonymousMonetarist's picture

'a fraudulent conveyance requires that Lehman was disposing of assets at below fair market value to harm creditors'

Ah no...that's like saying an insolvent company can take the money to Vegas and their guilt is a function of whether they
take a haircut or not...

If the bank was not solvent, for example, creditors can examine two years worth of bonus pay in determining whether executives will have to return the payouts to the bankrupt company's trustee.

Preference-payment rules allow creditors to look back one year if the executive or officer receiving the bonus is considered an "insider" under bankruptcy rules. Otherwise, preference claims extend back only about three months.

Preference claims are meant to prevent an insolvent company from favoring one creditor at the expense of another.

The repo transactions as well as the other nuggets unveiled by ZH lay out that Lehman was double secret insolvent..

The catch is that creditors in the Lehman case will need to prove that, considering the bonus payouts for example, the bonuses were not paid out in the ordinary course of business. Creditors will have to prove that paying out bonuses to managers who ran the company into bankruptcy was considered business as usual.

That of course is challenging since fraudulent conveyance has been institutionalized by GAAP, the SEC, the rating agencies and their Nancy Capitalist enablers.

Thu, 03/11/2010 - 19:11 | 262468 Rick64
Rick64's picture

 All this time and this is the excuse. Come on you guys are market wizards and geniuses you can do better than this.

Thu, 03/11/2010 - 19:14 | 262471 Crummy
Crummy's picture

As long as no one at the SEC fears sitting on their nuts while taking a shit, then no one in on this scam has anything to fear either.

They need to start putting a bounty on uncovering fraud, then we can start a sort of privateer force of regulators.

Our motto: Never send a lawyer to do a pirate's job.

Thu, 03/11/2010 - 19:27 | 262488 Jesse
Jesse's picture




Fri, 03/12/2010 - 01:05 | 262870 Anonymous
Anonymous's picture

yeah fucking awesome idea - too simple.

Fri, 03/12/2010 - 14:03 | 263412 cougar_w
cougar_w's picture

You just summed up ZH

Fri, 03/12/2010 - 23:44 | 264072 Miles Kendig
Miles Kendig's picture

'cept many of us are, in fact, Raiders...

Thu, 03/11/2010 - 19:14 | 262472 AnonymousMonetarist
AnonymousMonetarist's picture

In the United States, fraudulent conveyances or transfers are governed by two sets of laws that are generally consistent. The first is the Uniform Fraudulent Transfer Act ("UFTA") that has been adopted by all but a handful of the states.] The second is found in the federal Bankruptcy Code.

There are two kinds of fraudulent transfer. The archetypal example is the intentional fraudulent transfer. This is a transfer of property made by a debtor with intent to defraud, hinder, or delay his or her creditors.

Thu, 03/11/2010 - 19:14 | 262473 Anonymous
Anonymous's picture

Ho hum. Banks cheat, CEOs and regulators collude and lie. How many times can you be suddenly shocked to learn the same thing over and over again?

Either get off your ass, stop contributing your own funds to the rapist financial markets, and start marching in the streets demanding to go Swedish on the banks, or lose your own credibility along with them.

Thu, 03/11/2010 - 23:27 | 262774 i.knoknot
i.knoknot's picture

don't be so quick to discount the effectiveness of the small laps of a rising tide.

one item is a conspiracy, two is ..., three is ...

i believe most folks are 'on the ready' to act appropriately when the time comes.

this entire process is a comfortable removal of doubt.

Fri, 03/12/2010 - 00:15 | 262829 Anonymous
Anonymous's picture

the fix is in and we are up against connected parasites, but i agree, every ray of sunshine is welcome, sure it may not make a difference immediately and we have been depleted by these blood sucker for a long time, but you never know when it will do good, its all we can do, keep exposing things, maybe one day we will flush the parasites...

Fri, 03/12/2010 - 09:48 | 263109 Pat Shuff
Pat Shuff's picture

Acting appropriately/careful what is wished for dept.



"How a revolution erupts from a commonplace event--tidal wave from a ripple--is cause for endless astonishment...

First a piece of news about something said or done travels quickly, more so than usual, because it is uniquely apt; it fits a half-conscious mood or caps a situation... The fact and the challenger's name generate rumor, exaggeration, misunderstanding, falsehood. People ask each other what is true and what it means. The atmosphere becomes electric, the sense of time changes, grows rapid, a vague future seems nearer...

As further news spreads, various types of people become aroused for or against the thing now upsetting everybody's daily life. But what is that thing? Concretely: ardent youths full of hope as they catch the drift of the idea, rowdies looking for fun, and characters with a grudge. Cranks and tolerated lunatics come out of houses, criminals out of hideouts, and all assert themselves...

Such is, roughly, how revolutions "feel." The gains and the deeds of blood vary in detail from one time to the next, but the motives are the usual mix: hope, ambition, greed, fear, lust, envy, hatred of order and of art, fanatic fervor, heroic devotion, and love of destruction."

--Jacques Barzun, From Dawn to Decadence: 500 Years of Western Cultural Life 1500 to the Present

Fri, 03/12/2010 - 12:46 | 263280 YourAverageDebtSlave
YourAverageDebtSlave's picture

The powers that be let this information come out knowing full well that it would not be received well.  It reminds me of last week’s Nightline’s piece on 9/11 being a conspiracy that possibly is more than meets the eye.  It reminds me of PBS airing freedom to fascism.  Since when the hell did mainstream media start becoming so anti-government?


These pieces of news are nothing new, but the fact that the powers that be are now responding to these claims via mainstream media makes me suspicious.  Why release the information now?  They know that the general feel from “Joe Sixpack” is that the government is corrupt and something radical needs to be done.  Reports like this from mainstream media are just gasoline on the fire, almost as if they want there to be backlash.  It’s as if they are thumbing their nose at taxpayers saying look how corrupt we are, we know it angers you, now do something about it.  I see evidence of this when I read an online Wall Street journal article and in the comment section, 90% of the comments are saying something about how messed up our government is.


So then the question becomes why would the want aggravate us?  Back in 2008 for the first time (that I know of) the nation enacted an army brigade to be on alert here in the states (   Dennis Blair a few weeks ago stated that the intelligence community will if needed assassinate Americans they believe to be a threat to other Americans (my read is that this means the government as I’m sure the CIA will not be taking out the Bloods and Crips in South Central) (  I could go on with what’s out there that makes me think this is a controlled demolition of America as we knew it.


My guess is that whoever’s in power is waiting for STHF so that they can make a tremendous power grab in the name of democracy.  They will wait for anarchy to break loose, watch a couple of angry entitled generations of Americans riot, loot, and terrorize their next store neighbors and wait for the people to come crying to the government to restore order.  Once that happens, the government will come in with its cape and “save the people” by implementing a more tyrannical style of government than we currently have in place via the military.


What was once fringe thinking and conspiracy is starting to be mainstream, and I believe it is all a ruse to get the public fired up and ready to explode.  Once that happens the government will have a legitimate excuse for coming in and exerting control over the masses.  With our current debt levels, trade cap, shitty currency, we will all be happy to take jobs working in factories for enough wages to get our slice of bread for the day while we pay back the Chinese, Japanese, and the rest of the world while the same big wigs who orchestrated Lehman’s collapse travel to the Caribbean.  Aside from writing snarky comments on Zero Hedge and other forum boards, I’ll just wait back with gun in hand and wait for the fireworks to begin.


Fri, 03/12/2010 - 13:55 | 263407 WaterWings
WaterWings's picture


Fri, 03/12/2010 - 14:07 | 263419 cougar_w
cougar_w's picture

Why now: By the time anyone starts digging into this stuff the EuroZone will be imploding, bansk will be folding, and bigger shyte will have hit a bigger fan.

You throw your worst garbage on a bigger fire and run away.

Thu, 03/11/2010 - 19:15 | 262474 Cursive
Cursive's picture

These people should be fed to the harden criminals in a state prison.  We'll look the other way.  The inmates are free to do as they wish.  I really hope this is what happens.

Thu, 03/11/2010 - 19:18 | 262479 Waterfallsparkles
Waterfallsparkles's picture

I think the Banks are doing this right now.  Going to the Discount Window and pledging Securities for a Loan right before Earnings.  That way they do not have to show them on their Balance Sheets.  After Earnings they pay back the Fed Loan and get their Securities back.

Thu, 03/11/2010 - 22:12 | 262680 RockyRacoon
RockyRacoon's picture

Which transactions, of course, we can never know about.  It might stigmatize the banks, you know.  What a crock.  Audit the fed!

Fri, 03/12/2010 - 04:05 | 263012 Anonymous
Anonymous's picture

If Lehman had only been doing this a quarter - maybe a "clever" dressing of the balance sheet. But for years? There is no way other financial institutions haven't been doing plenty of this too. Doesn't absolve Lehman or the regulators from their despicable conduct, (perhaps it explains the 2 year lag in disclosure cuz it's gonna get even more ugly as we look under the kimonos of the other institutions) but one more time with feeling - the financial system is still in horrid shape. The real causes and problems all still lurk. Nothing has changed except power and risk is even more consolidated. Fasten your seat belts and keep some cash and gold at home.

Thu, 03/11/2010 - 19:18 | 262480 Anonymous
Anonymous's picture

Meanwhile, the market finished higher based on volume 3.

Fri, 03/12/2010 - 11:04 | 263167 blindfaith
blindfaith's picture

meanwhile, the average American has no clue and doesn't want one either...These white collar criminals depend on the bias media to help keep the lid on truth, and spam America with fun and dumb down crap.  It is all in the game, and everyone is in on the game.

Thu, 03/11/2010 - 19:20 | 262481 Anonymous
Anonymous's picture

Its good to know that a shell game is still a shell game, even with an Ivy-League shit ticket (MBA).

When do these crooks get to see some justice, folks?!

Thu, 03/11/2010 - 21:47 | 262652 Orly
Orly's picture

Hi Karl.

Nice of you to join us.

Thu, 03/11/2010 - 23:30 | 262777 i.knoknot
i.knoknot's picture

good eye... $10 bux says you're right.

i say he's as welcome as anybody, but am amused by the idea of an anon MO.


Fri, 03/12/2010 - 08:30 | 263075 CB
CB's picture


heh heh

Fri, 03/12/2010 - 00:50 | 262858 John Self
John Self's picture

Some might label the Ivy League degree a shell game in its own right.

Thu, 03/11/2010 - 19:22 | 262483 SilverIsKing
Thu, 03/11/2010 - 19:38 | 262505 chet
chet's picture

Yep!  Also he is a muslim communist who was born in Kenya!

It's true because someone wrote it on the internets!!!1!

Thu, 03/11/2010 - 19:42 | 262515 faustian bargain
faustian bargain's picture

So there's not going to be a fishing ban, then?

Thu, 03/11/2010 - 19:46 | 262521 SilverIsKing
SilverIsKing's picture

First, is there more than one internet?

"It's true because someone wrote it on the internets!!!1!"

Second, if someone acts like a jerk on the internet, does that make them one in real life?

Here's the original:

Thu, 03/11/2010 - 22:15 | 262684 RockyRacoon
RockyRacoon's picture

I believe you are looking for this reference:

Fri, 03/12/2010 - 02:35 | 262954 MagicHandPuppet
MagicHandPuppet's picture

"uh... I hear there's rumors on the internets"

Classic!  thanks for the link :)

Thu, 03/11/2010 - 22:39 | 262727 Anonymous
Anonymous's picture

You'll have to pry my fishing rod out of my cold dead hands!?!

Thu, 03/11/2010 - 19:23 | 262484 Crime of the Century
Crime of the Century's picture

We need bigger bonuses to keep our best talent!!

Thu, 03/11/2010 - 19:24 | 262485 Anonymous
Anonymous's picture

The comments on here are comical, as if everyone had no idea of the systemic fraud occurring to this second. Rotten to the core in plain sight.

If this is what is being released, one can only imagine what has been scrubbed.

Don't worry, government is here to help. "Can we see your papers first?"

Thu, 03/11/2010 - 20:16 | 262547 Cistercian
Cistercian's picture

 Yes indeed.And this report underscores why I call Wall St the worlds biggest game of 3 card monte.

 There is no bean.

Fri, 03/12/2010 - 16:53 | 263643 snakeboat
snakeboat's picture

New here much?

Thu, 03/11/2010 - 19:27 | 262490 vachon
vachon's picture

The very possibility that Lehman would be found criminally liable may go a long way towards explaining why Lehman couldn't find a buyer and was allowed by Paulson, et al, to fail.  However, this raises a host of other questions.  After everybody and his brother had examined Lehman's books during the sell-or-die weekend, the discovery of accounting fraud had to be not only discussed but given as a reason to Paulson and Geithner as to why Lehman not only  wouldn't but couldn't be bought.

What did the government know and when did they know it, indeed.

Fri, 03/12/2010 - 03:26 | 262988 Anonymous
Anonymous's picture

They all knew it, all along. At the time there was a major discussion of creating a 'Bad Bank' to hold 'bad' assets.

The fact that this solution was being discussed publicly, using euphemisms like 'bad assets' was amazing. What was actually being discussed was legally concealing vast, historically unprecedented illegal activity. Never in the entire discussion was correcting the fraud, or arresting its perpetrators discussed. 100% of the effort was focused on burying the evidence, and preserving the wealth, power and position of the perpetrators.

Everyone involved at every level of the process, from the SEC to the NY Fed to FINRA to the Treasury is an accessory, and an accomplice. There isn't a problem with the system. The problem IS the system.


Fri, 03/12/2010 - 07:34 | 263057 Anonymous
Anonymous's picture

And aigs books were legit? Come on now..lehman was let go because it benefited goldman. Just as an aig credit facility benefited goldman. Everything benefits goldman when goldman has puppet masters in every corner.

Fri, 03/12/2010 - 23:50 | 264078 Miles Kendig
Miles Kendig's picture

And what exactly was decided at those discrete points along the time line, when along that line did the individual decisions fall, where were they announced/implemented and by whom.

Thu, 03/11/2010 - 19:30 | 262492 deadhead
deadhead's picture

Thank you Tyler and ZH for bringing REPO 105 to the forefront.

The Fed and the SEC must answer immediately to the REPO 105 scandal.  

p.s. for all you url fans, www dot repo105 dot com is still available. wonder how long that will last???

Thu, 03/11/2010 - 19:38 | 262504 Careless Whisper
Careless Whisper's picture

go for it dh. it's only $11, just make sure u move it offshore.

Thu, 03/11/2010 - 20:55 | 262591 Howard_Beale
Howard_Beale's picture


Someone lapped it up in no time flat.

Fri, 03/12/2010 - 09:01 | 263087 deadhead
deadhead's picture

sure didn't take long!

Thu, 03/11/2010 - 19:35 | 262498 chet
chet's picture

I heard about this outfit Enron that perfected this type of creative financing.  Real wizards of the new economy, those guys.

Haven't heard anything about them for awhile.  Wonder what happened to them....

Thu, 03/11/2010 - 19:55 | 262532 Crummy
Crummy's picture


Thu, 03/11/2010 - 22:25 | 262701 John Self
John Self's picture

Honestly, Repo 105 does sound a lot like Mahonia or some of the other Enron "transactions."

Thu, 03/11/2010 - 19:46 | 262520 Miles Kendig
Miles Kendig's picture

When it all is boiled down it's just Romper Room.

Thu, 03/11/2010 - 20:22 | 262560 Howard_Beale
Howard_Beale's picture

I think Miss Nancy would like you to sit in the corner for saying that!

Fri, 03/12/2010 - 05:20 | 263026 Miles Kendig
Miles Kendig's picture

It is really quite sad how the lords of finance keep on forming corners to die in.  Me?  There are corners I do like quite well thank you very much, but I prefer to concern myself with the crop rows.  Especially since the future may well be in ag thanks to those kids that never grew up and fail, strike that, refuse to apply the law of the street unto themselves.  So good to see you in such fine form Pal.

Fri, 03/12/2010 - 10:39 | 263144 Howard_Beale
Howard_Beale's picture

I've missed you Miles.

Fri, 03/12/2010 - 13:42 | 263389 Miles Kendig
Miles Kendig's picture

The sentiment is appreciated and returned in full.

Thu, 03/11/2010 - 19:46 | 262522 Anonymous
Anonymous's picture

This has been SOP for 15 years....

Fri, 03/12/2010 - 11:13 | 263174 Hulk
Hulk's picture

Not on this scale.
Enron and Worldcom were small potatoes compared to what is currently

Thu, 03/11/2010 - 19:46 | 262523 buzzsaw99
buzzsaw99's picture

Lehman didn't have big ballz like Hank Paulson and his criminal cohorts. It doesn't matter how much they lie cheat or steal. No-one can stop them, they are gods.

Thu, 03/11/2010 - 20:02 | 262540 Ripped Chunk
Ripped Chunk's picture

The system is loaded with the malignancy of derivatives.  The cancer has spread to every organ worldwide. Its domination of a once seemingly healthy organism is complete.

Losing Lehman and Bear was like removing some of the cancerous growth. It stopped nothing that wasn't already inevitable.

The patient is terminal. We only await the moment when our dark overlords withdraw life support.

Thu, 03/11/2010 - 20:02 | 262541 deadhead
deadhead's picture

for all of you bank bulls, just keep buying that common stock.  what could go wrong?

Thu, 03/11/2010 - 20:34 | 262555 Howard_Beale
Howard_Beale's picture

Let it keep ramping--my trade is coming. Jan 2012 bear spread at the cheapest vol in history coming soon to my portfolio on JPM. But in the last few days, I have started to wonder when the end game will be for some of the online brokers. IBD has Lloyds of London insurance (LoL in more mays than one since I just realized not only is it their acronym but they are also in trouble). Hmmm. Counterparties to my trade may be out of business in early 2012....more hmmm. Sorry, but I will do it as a credit spread and take my chances.

As for Repo 105--shame on the accountants, Feds, and rating idiots that couldn't see something so simple. These people obviously can not be bothered to do their jobs or get paid too well not to do them. Whichever it is, fuck em.

Thu, 03/11/2010 - 21:50 | 262654 Orly
Orly's picture

Allow me to congratulate you well in advance on your major, major score.

It will be one for the family scrapbook.

Thu, 03/11/2010 - 22:35 | 262703 Howard_Beale
Howard_Beale's picture

Please clarify...

Fri, 03/12/2010 - 11:02 | 263164 Orly
Orly's picture

You bought LEAP Puts as I read your note, in the belief that the banks are going to take a real drubbing over the next two years.

I couldn't agree more with that sentiment and it sounds like you're playing the right cards at the right time.


Thu, 03/11/2010 - 22:34 | 262715 Gromit
Gromit's picture

Brokerage account insurance in excess of SIPC limits is windowdressing.

If there is one claim there will be thousands and the counterparties cannot stand the potential pain.

Your trade is protected by the OCC so if you come up with a big winner can't you transfer the position to a custodial account (cash account!) at a Trust company?

Biggest problem for me with online brokers is that they are at the mercy of the firms that clear for them.

Thu, 03/11/2010 - 22:51 | 262740 Howard_Beale
Howard_Beale's picture

That is my main concern as well....fearing the clearing.

Thu, 03/11/2010 - 23:05 | 262760 Gromit
Gromit's picture

Which is why I opened a custodian accountto hold some munis and to be available to transfer in profitable option positions to escape the SIPC vulnerability.

Only problem - I'm paying 30 basis points on my munis unnecessarily as no broker has failed (yet) - and none of my longshot option trades have been profitable recently! But the account is set up and if I hit a home run that's where the position is going.

As for accounts at ThinkorSwim and Optionshouse both clear thru PNSN, which has a market cap of 100 something million, not very reassuring.


Thu, 03/11/2010 - 20:07 | 262545 dumpster
dumpster's picture

every one is on to the fraud .. they all want a piece of it ..

it is no secret... its like the emperer   walking down main street ,, and not until the little person says .. hay you people where are the clothes lol

Thu, 03/11/2010 - 20:13 | 262549 hambone
hambone's picture

Gotta say I'm not suprised by the findings (depressed, yes, shocked, no).  My difficulty comes when I realize that none of this is "criminal" in America any longer.  White collar looting is just part of the game like bribes in Mexico.  Stealing from my fucking pocket to put it in theirs is now ok.  That's just part of the fabric of our country now.  Hmmm, makes you question justice and the like when crime is committed in broad daylight, everybody sees it, but authority is on the same side as the criminals...acckkk, that's dark.

Thu, 03/11/2010 - 20:32 | 262569 chet
chet's picture

Couldn't agree more.  There is no law for the powerful.  Ten years ago, I would have called that a conspiracy theory.

This is a country where the government can lock up a citizen as an "enemy combatant", torture him for a few years until he's insane, while doing nothing to bring him to trial, get a little "slap" from the judiciary, and  no one pays any price for it.  No one is fired or called out, much less prosecuted.

Not to call out one administration.  All parties and oligarchs are involved in it.

I used to be able to resort to our country's respect for law and order as the bedrock to rely on no matter what political whims were blowing, but now I know I was mistaken.

We're basically like post-Soviet Russia but with the class to try to keep up appearances better.

Thu, 03/11/2010 - 22:32 | 262712 DaveyJones
DaveyJones's picture

+100  In fact, the torturer can get the lawsuit thrown out because it might reveal "state secrets"

Ah, the pinnacle of justice. The envy of the world

Thu, 03/11/2010 - 20:16 | 262553 digalert
digalert's picture

Uh, you mean Turbo Tax Cheat Timmy Geithner is involved?

don't say...


Thu, 03/11/2010 - 20:28 | 262562 BlackBeard
BlackBeard's picture

I wanna see somebody go to jail.  It would make me feel better.  Bernie Madoff was a joke.  Someone in a substantial position please.

Thu, 03/11/2010 - 21:00 | 262573 Howard_Beale
Howard_Beale's picture

Please put up your list and perhaps Marla can create a poll of who we most want to see do the perpwalk. Mine starts with BB. Still waiting for the last bank standing in Dec 2012 poll, Marla.

1) JPM

2) BAC

3) WFC

4) C

5) Will there be any banks left standing in 2012?

Thu, 03/11/2010 - 21:01 | 262595 BlackBeard
BlackBeard's picture

B Frank

C. Dodd

A. Greenspan

R. Rubin

A. Mozillo

B. Bernanke

T. Geithner

H. Paulson

R. Emmannuel (for pimping himself for FNM and FRE just as much as Dodd and Frank)


How's that for a start?  that's just a start.  There's so many pieces of shit out there that need to be flushed down the proverbial toilet. But, that's all I could think of in 15 seconds.

Thu, 03/11/2010 - 21:09 | 262604 Howard_Beale
Howard_Beale's picture

It's a start, but it needs to be in order of some kind. You know, we could do an American Idol thing each month and vote some off in terms of relevancy and how much they actually might like prison (oh, I dropped my soap, dear me). Basically like a democracy. Of course, since we don't live in one it is hard to imagine what that would be like.


Thu, 03/11/2010 - 21:26 | 262626 BlackBeard
BlackBeard's picture

lol good idea.  I don't imagine Barney Frank would even bother with soap on a rope.....

Thu, 03/11/2010 - 22:04 | 262664 Orly
Orly's picture

1. PBush (posthumously...)

2. GHWBush

3. GWBush

4. WJClinton

5. ZBrzenski

6. HKissinger

7.LBJohnson (posthumously...)

8. FRodriguez

9. AGreenspan

10. Timothy Geithner

Thu, 03/11/2010 - 22:25 | 262700 BlackBeard
BlackBeard's picture

What about Nixon?

Fri, 03/12/2010 - 08:33 | 263076 CB
CB's picture


W Wilson


Fri, 03/12/2010 - 11:04 | 263166 Orly
Orly's picture

Yes, yes and yes.

Wilson was a total tool, though.  Princeton liberal will make the world all better...

He was played big-time.

Fri, 03/12/2010 - 23:23 | 264054 CB
CB's picture

Alexander Hamilton.

ha. this government was formed, in part, by criminals. 

Thu, 03/11/2010 - 22:20 | 262691 Anonymous
Anonymous's picture

The REAL axis of evil..

I want a bumper sticker stating such...

Thu, 03/11/2010 - 21:44 | 262650 bugs_
bugs_'s picture

Taco Bell will be the survivor.

Thu, 03/11/2010 - 22:24 | 262698 Howard_Beale
Howard_Beale's picture


Fri, 03/12/2010 - 05:59 | 263041 Miles Kendig
Miles Kendig's picture

Chief, you can take this job and shovel it! :-)

Thu, 03/11/2010 - 22:59 | 262749 hedgeless_horseman
hedgeless_horseman's picture

Taco Cabana = Taco Bell + EtOH


Fri, 03/12/2010 - 02:41 | 262957 Strom
Strom's picture

+ Food that actually tastes good.

Fri, 03/12/2010 - 02:42 | 262958 Strom
Strom's picture

Nice Demolition Man reference...

Fri, 03/12/2010 - 09:03 | 263090 deadhead
deadhead's picture

 perhaps Marla can create a poll of who we most want to see do the perpwalk


GREAT idea!   

Thu, 03/11/2010 - 20:35 | 262572 Anonymous
Anonymous's picture

This is some huge size - $38B - $50B in repo for 1 week. These guys had to be offlaying this to Hedge Funds, cause the other large banks wouldn't take it due to their Balance sheet size constraints - Although I always found it interesting why many of these guys had differing quater-ends. GS always had their quarter-end the third week of like October, January, April and July - Lehman and Merrill and Morgan Stanley end of November, etc - then JPM and BOA and other Banks were on normal quarter-ends

Thu, 03/11/2010 - 22:13 | 262681 Orly
Orly's picture

Exactly what I was thinking...

Ladies and gentlemen, what TD, et. al., have described here is the ultimate circle jerk.



Thu, 03/11/2010 - 22:22 | 262693 Reflexivity
Reflexivity's picture

You beat my reply by a minute, and were much more succinct; humorously so.  Well done.

Fri, 03/12/2010 - 02:24 | 262951 chindit13
chindit13's picture


Fri, 03/12/2010 - 10:51 | 263149 tip e. canoe
tip e. canoe's picture

Ring around the rosie,
A pocket full of posies,
Ashes! Ashes!
We all fall


Thu, 03/11/2010 - 22:14 | 262683 Reflexivity
Reflexivity's picture

+1, interesting insight.


Are you suggesting that the different quarter-end dates were intentionally selected by each bank in reference to one another?

And perhaps the reason this is, is so that each of the big banks could provide 'load balancing' services [secretly of course] to each other (sort of like the way a computer server cluster works) to facilitate temporary onloading and offloading of certain liabilities and assets in order to manage earnings, satisfy regulatory requirements, etc. both conveniently and descretely?

Said another way, the banks could play musical chairs with excess or deficient assets and liabilities, but in such a way that the music never stops--becaue the books don't close everywhere all at the same time.

An interesting idea.



Fri, 03/12/2010 - 06:05 | 263043 Miles Kendig
Miles Kendig's picture

Which would render the concept of fed cluelessness totally suspect and provides an admirably viable pathway directly to the core.

Fri, 03/12/2010 - 10:56 | 263152 tip e. canoe
tip e. canoe's picture

also interesting that JPM's quarter ended in September being that they pulled the plug.

Thu, 03/11/2010 - 22:59 | 262750 Ragnarok
Ragnarok's picture

Wow! You hit the nail on the head. Isn't collusion a crime?

Thu, 03/11/2010 - 20:36 | 262574 dumpster
dumpster's picture

well you had Martha Stewart

Thu, 03/11/2010 - 20:43 | 262581 rubearish10
rubearish10's picture

Great report but why is nobody paying attention? Reading this and comments really gets us jazzed up but then,,,,silence. What's wrong? Is this a dream or how come there's no affect where it matters, bank stocks?? Do we have to take this to Washington? Can they read?

Thu, 03/11/2010 - 20:45 | 262583 ratava
ratava's picture

have we arrived to the logical conclusion only way out of this mess is handing the power over to computers?


oh wait, we already sorta did

Thu, 03/11/2010 - 20:45 | 262584 johngaltfla
johngaltfla's picture

God Damnit Tyler, if you're ever on Siesta or Longboat Key I owe you 20 martinis.



Thu, 03/11/2010 - 22:05 | 262667 Almost Solvent
Almost Solvent's picture

God bless Monroe County! I am currently in the wrong one, NY, but atleast not MI. Just need to suck a few bucks more outta upstate and then I'm outtie.

Sittin' on the beach earning 20%!

Thu, 03/11/2010 - 22:44 | 262733 merehuman
merehuman's picture

dont tell the poor

Fri, 03/12/2010 - 01:32 | 262895 What a mess_man
What a mess_man's picture

Better up the martinis dude - rounds for the entire staff! 



Thu, 03/11/2010 - 20:51 | 262587 nope-1004
nope-1004's picture

That shifty little wimp Geithner lies more than anyone I've ever seen.

He needs to go to jail.

Thu, 03/11/2010 - 23:33 | 262780 johngaltfla
johngaltfla's picture

F'ing dwarf needs to be in Attica with 5 large homosexually deprived boyfriends nicknamed the "Mules". He's a lying POS and never held a real job in his entire freaking life.

Thu, 03/11/2010 - 21:02 | 262598 BlackBeard
BlackBeard's picture

FYI, Obaman has nominated Janet Yellen to replace Kohn. per BBerg:


AAAAAAAAAAAAAAAAA HAHAHAHAHAHA!! He HAS to be retarded, because he just put his personal stamp on ANOTHER retard for a position that supposedly requires critical thinking.

Thu, 03/11/2010 - 21:16 | 262613 Howard_Beale
Howard_Beale's picture

"Yellen spent most of her career teaching economics and researching labor markets, joining the University of California at Berkeley in 1980. She and her husband George Akerlof, a Nobel Prize-winning economist, have written more than a dozen papers that included studies on unemployment, wages, street gangs and out-of-wedlock births."--Bloomberg

Another winner in the keeping interest rates at zero camp. Savers--you better put your money in the market!--NOT.

Thu, 03/11/2010 - 21:28 | 262631 BlackBeard
BlackBeard's picture

fantastic, because all of that practical experience theorizing about linear relationships in a classroom gives her an edge when micromanaging the world's largest economy.

Thu, 03/11/2010 - 22:32 | 262711 Howard_Beale
Howard_Beale's picture

Just like Uncle Ben. Who better than an academic? How about a foreign academic like Naill Ferguson that at least has a clue. If Arnie can be Gov, then Naill can be on the Federal Reserve Board. That way, if he can't waterboard Ben into sanity, he can at least be blamed for his "academic" background.

Thu, 03/11/2010 - 21:28 | 262629 taraxias
taraxias's picture

The empty-suit-in-chief didn't nominate anybody. The FED nominated JY and told the empty-suit-in-chief to announce it.

Thu, 03/11/2010 - 21:45 | 262651 bugs_
bugs_'s picture

bugs_: is she gellin'?

wopr: like a fellon


Fri, 03/12/2010 - 06:33 | 263046 Miles Kendig
Miles Kendig's picture

And for all of you interested in CRE I would advise a refresher on Yellen's baby, 250 Montgomery, in total.  The pivot.

Thu, 03/11/2010 - 21:20 | 262618 Anonymous
Anonymous's picture

Man o man.

Not to foment populist rage, but y'know, my credit card bills count against me. How come the banks credit card bills don't count against them? One rule for them the other for me?

Dylan R? You getting this?

Thu, 03/11/2010 - 21:26 | 262625 Anonymous
Anonymous's picture

"Richard Fuld, Lehman’s former Chief Executive Officer denied any recollection of Lehman’s use of Repo 105 transactions. Fuld said he had no knowledge that Lehman treated any kind of repo transaction as a true sale or that Lehman ever removed from its balance sheet assets transferred in a repo transaction. In addition, Fuld did not recall having seen any reports referencing the amount of the firm’s Repo 105 activity. Fuld further stated that he did not know that Lehman removed approximately $49 and $50 billion in inventory off its balance sheet at quarter-end through the use of Repo 105 transactions in first quarter 2008 and second quarter 2008, respectively. Fuld said, however, that if he had learned that Lehman was temporarily cleansing its balance sheet of assets at quarter-end through Repo 105 transactions, it would have concerned him."

So what was he getting paid for (like, just shy of $500 million all told)?

Fri, 03/12/2010 - 12:46 | 263284 Anonymous
Anonymous's picture

Just to be clear, he would have been concerned if he had known. He wouldn't necessarily have done anything differently, he just would have been concerned. I think it should have been in his contract that he be required to make some very serious, contemplative and concerned faces before hitting the golf course every day.

Thu, 03/11/2010 - 21:31 | 262632 Hondo
Hondo's picture

The counterparties to these trades need to be investigated also.  This was out and out  fraud committed by both parties.  The counterparties by taking crap for collateral knew what Lehman was up to and in bed with them.  The whole damn street knew Lehman's situation but the shareholder hadn't a clue due to  fraud.  Banks, the Fed, government in general have absolutely no trust left.  We need to squeeze them until they bleed....

Thu, 03/11/2010 - 23:09 | 262757 hedgeless_horseman
hedgeless_horseman's picture

Dream on.  Once this thread hits the second page of ZH this story will be forgotten; else the .gov wouldn't have let the horse out of the barn.

Besides, according to the LA Times, the BIG news is, "Democrats seek healthcare consensus."  I know, rocked my world, too!

Fri, 03/12/2010 - 01:13 | 262874 Tethys
Tethys's picture

Been having a sneaking suspicion of late that health care was reincarnated in order to keep the economy out of the headlines.  After the Massachusetts election, seems there was a period of a week or two when we didn't hear about health care reform every day 24/7, and economic stories started getting more press.

If Joe & Jane 6pack started coming out of their coma, things might get ugly.  Can't have that...

Fri, 03/12/2010 - 10:58 | 263159 Hulk
Hulk's picture

Lets start pretending this fraud riddled system is fixable
and place some pressure on congress to get William Black
in charge of cleaning up this mess and prosecuting these criminals.
On the outside chance that the system is salvageable.....

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