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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 - 21:33 | 262635 Anonymous
Anonymous's picture

So let me get this straight...

Setting - Lehman board room
CEO Richard Fuld: We need to reduce net leverage. Make it happen.
Financial Manager: Yes sir, right away sir.

Setting - Deep in the bowels of Lehman
Financial Manager: Mr. Fuld says reduce net leverage.
Financial Wizard: We'll do an 'off the record repo 105'.

Setting - Lehman board room (later)
CEO Richard Fuld: Let me see the numbers.
Financial Manager: We did it sir, take a look at these numbers. What we did...
Financial Lawyer: Don't tell Mr. Fuld what you did! He needs plausable deniability.

Setting - MSM financial news outlet (Spring 2008)
CEO Richard Fuld: "The worst is behind us".

Fri, 03/12/2010 - 06:55 | 263049 Miles Kendig
Miles Kendig's picture

And we learn by direct expression what sense of duty, fiduciary and otherwise really resides among those that lead our government & financial sectors and how it has been focused during the challenges of our time.

Thu, 03/11/2010 - 21:33 | 262636 Anonymous
Anonymous's picture

For heavens' sake, looks like Madoff has a bunkmate! Shame on the accountants and bean-counters that signed off on this deal.

Thu, 03/11/2010 - 22:08 | 262639 williambanzai7
williambanzai7's picture

GORILLA IN THE MIST: http://1.bp.blogspot.com/_wkgIzuqJM0w/S5mV9uUXN7I/AAAAAAAADBc/UQNZ62b0tk...

I want to know why the SEC is too busy cracking down on the evil short sellers and chasing the psychic investment adviser instead of doing what needs to be done here.

I want to know what those Wall Street hustlers are gonna do if or when their Dollar/FDIC carry trade ever gets pulled.

I want to know why Ken Lay had to gave his life in vain.

I want to know how many times a day Erin Calin is getting muff dived out in the Hamptons.

 

 

 

Thu, 03/11/2010 - 22:17 | 262687 Orly
Orly's picture

Hush it, Banzai Bill.  They got the psychic, didn't they?

Thu, 03/11/2010 - 22:23 | 262696 williambanzai7
williambanzai7's picture

That should be their epitaph...

Thu, 03/11/2010 - 21:43 | 262649 Anonymous
Anonymous's picture

Crap sandwich. This country is a steamy crap sandwich.

Thu, 03/11/2010 - 22:08 | 262665 plocequ1
plocequ1's picture

Look, Im getting tired of this. I am a Middle class citizen and i am through with my anger stage. Why, You ask?, Ill tell you. The bottom line is the Rich have taken over the Government. Anything goes. There are no more rules. The money is being taken from the poor and given to the rich. When you see the stock market go up, Thats the money taken from the Bond auction going directly into stocks. We are doomed. Stop your whining and just say to yourself, We are fucked... Get laid. Smoke a joint. You will feel better.

Fri, 03/12/2010 - 01:37 | 262903 Anonymous
Anonymous's picture

the rich took over the government on 11/22/1963 and you are only finding out about it 50 years later....

Fri, 03/12/2010 - 20:35 | 263887 Anonymous
Anonymous's picture

The rich took over this country in 1775 when the Continental Congress agreed to pay George Washington any and all expenses he incurred (as he ostentatiously refused to "accept any salary") to be Commander in Chief in the War of Independence. Although he was one of the richest men in America (he'd married the richest woman on the Continent and was a fabulous land speculator), he didn't need to actually expend any of the funds for which he billed Congress, as he was a genius at getting others to provide what he wanted on credit. The final bill - which Congress paid - was, in 2008 dollars, $258,743,452. A general's pay for the same period would have been $231,400. We sure were lucky to have such a great patriot volunteer his services!!

In addition to billing the government for keeping an entourage, worthy of a European king, of personal servants, assistants, aides, and followers (many of whom he appointed to generalships, gave procurement contracts to, entered into land speculation deals with, and later appointed to federal gov't positions), many millions of dollars worth of the finest horses, imported wine, furniture, books, carriages, etc, that he bought during the war and put on his expense account were directly sent to Mt. Vernon for his future enjoyment. Every mansion that he stayed in (over 2 dozen) during the War was completely redecorated during his stay, and some received major upgrades and extensions. While his soldiers were starving at Valley Forge receiving no pay, Washington went around to them and bought up for pennies their rights to post-war land grants Congress had authorized. After the War he righteously demanded that Congress honor all veterans grants awarded, you know, for the sake of the men.

This has been a government for the rich, by the rich, and of the rich from the beginning. Every square inch of land the English Crown gave to the "colonists" and "settlers" and "immigrants" was in fact given either to rich men (like Willian Penn and Lord Baltimore) or organized corporations (like the West India Company and the Plymouth Bay Colony). It's been trickle-down for four hundred years. I only single President Washington out because the "American Exceptionalism" myth is so well captured by his sparkling PR-created wholesome image. People get (or tolerate) the government they deserve, and America has never been any kind of exception to anything.

Thu, 03/11/2010 - 22:10 | 262675 assumptionblindness
assumptionblindness's picture

From CNBC.com:

<<Lehman Brothers used accounting gimmicks and had been insolvent for weeks before it filed for bankruptcy in September 2008, but there was not extensive wrongdoing, a court-appointed examiner has found.>>

Go figure...

Fri, 03/12/2010 - 13:21 | 263355 Anonymous
Anonymous's picture

So, lemme get this straight...

I have a Visa card that is charged up the wazoo. So I open a MasterCard account and pay off the Visa bill by getting a cash advance on the MasterCard.

If I use Lehman rules I can just ignore the MasterCard bill in my personal balance sheet because the cash advance was actually a "sale".

Sweet, I'm sure MasterCard will be sympathetic to my new personal balance sheet accounting.

Thu, 03/11/2010 - 22:23 | 262690 Crab Cake
Crab Cake's picture

I really, really, love the fancy words.  The accounting is second only to the language for crying out loud.  Financial innovation...grrrr....

I have some words; simple ones.

Fraud. Theft. Criminals. 

WE ARE BEING ROBBED, EXTORTED, AND LIED TO.

THE ELECTED OFFICIALS, THE COPS, AND THE CRIMINALS ARE IN BED TOGETHER.

It's time to burn the house down.  I'm ashamed to be an American, and so should be us all. 

I have something to say to the so called oligarchs who live in "secure" walled communities in prominent cities and suburbs near us all... Do you think the American middle class will go gently into that good night?  Do you think you and your families are untouchable?  Eye for an eye.  My family's future for your family's future.  How safe are you, really? 

Let's make that Peoples' enemy list mentioned above, shall we, and feed it to the hungry, the zealous, the dispossessed, and the angry.  Let us see how powerful and mighty these pukes are when the masks are off. 

Fri, 03/12/2010 - 02:00 | 262924 jeff montanye
jeff montanye's picture

how about a deck of cards with their pictures on them?

Fri, 03/12/2010 - 07:03 | 263050 Miles Kendig
Miles Kendig's picture

Better to use condoms and make 'em like trading cards, with their picture on one side and quick stats on the other.

Thu, 03/11/2010 - 22:22 | 262694 chindit13
chindit13's picture

One fears for his children.  I mean, I always worried my kids would grow up to be dastardly criminals like Wall Street bankers, accountants, Fed officials, senators or, god forbid, President of the United States.

Fortunately my oldest had the decency to choose character, honor and integrity when he chose to put his skills to use as a hit man for a Mexican Drug cartel.  While my own heart is filled with pride whenever I hear of another competitor butchered or dropped in a vat of acid by "my boy", I do have some sympathy for the tortured souls that must be Mother Fuld, Mother Geithner, Mother Bernanke, Mother Obama, etc.  Oh the horror!

Fri, 03/12/2010 - 01:01 | 262867 Anonymous
Anonymous's picture

Bravo,I fell out of my chair and I'm still laughing to keep from crying

Thu, 03/11/2010 - 22:34 | 262714 Anonymous
Anonymous's picture

"Only little people pay taxes" Leona Hemsley, move on little people, nothging to see here!

Thu, 03/11/2010 - 22:34 | 262716 lizzy36
lizzy36's picture

I disagree on one point, one person will be prosecuted:Erin Callan.  Rightly or wrongly, she is the outsider who will be forced to fall on the proverbial sword. .

Reading merely part 1 of 9, makes one literally ill. 

It also makes one realize that the only way to avoid the next LEH, is to allow Senator Kaufman's speech (earlier today) to become law.  The probability of that happening, are the same as Mars bailing out the world. 

Fri, 03/12/2010 - 07:24 | 263054 Miles Kendig
Miles Kendig's picture

And let's never forget that Fuld, like Thain & Lewis before him have only had to resign their command while their commission remains intact.  Welcome to the application of military justice under the UCMJ to those that are obviously operating with an implicit or explicit guarantee to do so freely under federal authority during times of declared national emergency. The realization of what the policy of judicial exclusion is in practice. 

Fri, 03/12/2010 - 11:15 | 263177 tip e. canoe
tip e. canoe's picture

right on lizzy, she's the logical goat.

if so, let's hope she grows a pair of cajones, pleads not guilty and calls every last one of the boys out of the closet for the public record.

Thu, 03/11/2010 - 22:42 | 262729 buzzsaw99
buzzsaw99's picture

ZEROHEDGE GETS HEADLINE @ HUFFPO!!

Thu, 03/11/2010 - 22:43 | 262732 rubearish10
rubearish10's picture

Yeah Baby! Soon TSHTF!!!

Thu, 03/11/2010 - 23:02 | 262751 williambanzai7
williambanzai7's picture

BANZAI7 NEWS--This report just in: Tatoo artists in LA are reporting a surge in "Repo 105" requests:

http://2.bp.blogspot.com/_wkgIzuqJM0w/S5mtMam9ZiI/AAAAAAAADBk/fuHR5dRvWU...

Thu, 03/11/2010 - 23:01 | 262754 quant-this
quant-this's picture

I dont understand, how is a Repo 105 different than any other repo, other than the bad accounting treatment not showing the Repo as a liability? And is it called a 105 because you posted 5% cash with the collateral?

Thu, 03/11/2010 - 23:03 | 262756 rubearish10
rubearish10's picture

I thought because it get booked as a sale which eliminates the liability?

Thu, 03/11/2010 - 23:15 | 262768 quant-this
quant-this's picture

Right, so it's just the accounting treatment. But I really feel like a lot of banks are doing this. But how do you get away with booking the haircut and not have it show up as a loss. So if I do a repo with you and you give me $1b in securities, I'm most likely only going to give you a $950m loan. Which means that if you book it as a sale then you are selling $1b for $.95b and need to take a $50m loss. This could be beneficial for tax shielding but if done in quantity could show some big losses. Unless they were over borrowing and getting 1.05 LTV by paying a much higher rate. Then they can book a gain and on top of that reduce both assets and liabilities and increase equity, in which case leverage and ROE ratios improve. I have to assume that is what they were doing. 

 

The $1b question is who was their counterparty and what rates where they paying for the additional counterparty risk.

Thu, 03/11/2010 - 23:21 | 262770 rubearish10
rubearish10's picture

Well, perhaps the securities weren't market to market, hence they were actually worth less to begin with? Got me bud, sorry.

Thu, 03/11/2010 - 23:50 | 262799 i.knoknot
i.knoknot's picture

how come the letters "aig" just bubbled up from my gut without any voluntary assistance...

(pure tin-foil, of course)

Fri, 03/12/2010 - 01:32 | 262894 Anonymous
Anonymous's picture

i think aig is an excellent suspect...and somewhere
in the background is our good bud goldman sachs
financial terrorist extraordinaire...

Thu, 03/11/2010 - 23:22 | 262772 Anonymous
Anonymous's picture

All you guys are only complaining because your not rich or in on the "schemes," your lucky to live in a country where you can complain about your betters and not get disappeared. Whiners all.

Thu, 03/11/2010 - 23:53 | 262803 i.knoknot
i.knoknot's picture

who flagged this as junk...?

there's something to be said for still being able to whine...

i'm not smiling when i write this, either.

Thu, 03/11/2010 - 23:58 | 262811 dogbreath
dogbreath's picture

there is a man with a whip

there is another man with whip marks

identify yourself

Fri, 03/12/2010 - 00:10 | 262821 i.knoknot
i.knoknot's picture

purely an observer in this case.

someone flagged his post as junk (probably indignant about being called a whiner)

i find more truth in his general position than insult. in many places ZH and such a community can't exist.

my endorsement belies my fear that we are moving more towards that place than away from it

cheers

Fri, 03/12/2010 - 00:23 | 262834 dogbreath
dogbreath's picture

I agree with you but you only.  Some who come here are not champions of liberty.  Some come here to display their arrogance to mock the sheeple..   Hahaaa   you whine that you are not us

 

Fri, 03/12/2010 - 01:34 | 262899 Anonymous
Anonymous's picture

i don't consider your trailer trash friends
my betters....go back to stirring your
macaronni and cheese....

Fri, 03/12/2010 - 11:08 | 263170 tip e. canoe
tip e. canoe's picture

nice to see the long-repressed true feelings start bubbling up to the surface.  

means the end is getting near(er).

"Let them eat Spam!"

 

Fri, 03/12/2010 - 03:47 | 263001 Anonymous
Anonymous's picture

These vultures rob everything
Leave nothing but chains
Pick a point on tha globe
Yes tha pictures tha same
There's a bank a church a myth and a hearse
A mall and a loan a child dead at birth
There's a widow pig parrot
A rebel to tame
A whitehooded judge
And a syringe and a vein
And tha riot be tha rhyme of tha unheard

Calm like a bomb

- RATM

Thu, 03/11/2010 - 23:41 | 262782 williambanzai7
williambanzai7's picture

Didn't they just let Hank Greenberg off the hook for this kind of Hanky panky?

BTW, I'm training my dog "Spread Sheets" how to eat gold ingots, just in case things really get dicey.

 

Thu, 03/11/2010 - 23:52 | 262801 kote
kote's picture

Repo 105 makes front page NY Times: http://www.nytimes.com/2010/03/12/business/12lehman.html

"A version of this article appeared in print on March 12, 2010, on page A1 of the New York edition."

Thu, 03/11/2010 - 23:56 | 262808 i.knoknot
i.knoknot's picture

god i hate clicking on nyt links... it feels like i'm helping legitimize their continued existence.

(every little bit/hit counts...)

Thu, 03/11/2010 - 23:59 | 262813 kote
kote's picture

Let them see the interest that exists in this type of story.  Let them see the ZH referrer tags in their logs.  It all helps.

Also, postcards from greece made A1 too.

Fri, 03/12/2010 - 00:08 | 262820 Anonymous
Anonymous's picture

REPO 105

Fuld.

HEH.

He's over there laughing with GHWB and Clinton and the rest of the 'gang'.

LOLZ.

So GS getting into the commodities positions now is kind of obvious , right?

If we don't find the next treasury auction, oh we will die. oh , we will die.

-MB

Fri, 03/12/2010 - 00:23 | 262832 Pike Bishop
Pike Bishop's picture

ZH gets a front page banner byline at HuffingtonPost. No wonder i couldn't get to your server. This is the bigvolume time. Next entertainment awards ceremony, are we going to get a red carpet review? You're going to need a celeb gossip page, too.

Ya know,... 97.8% of the people aren't going to know what you are talking about. Maybe that's good.

But if you take a half-hour and do a little more explaining of the text, so that civilians can understand what the report is talking about, there might be some more click-throughs on the dinner table.

Add an fbomb or two. They'll make the guys feel at home, and the women damp.

Congrats.

 

 

Fri, 03/12/2010 - 00:23 | 262835 kote
kote's picture

"But if you take a half-hour and do a little more explaining of the text, so that civilians can understand what the report is talking about, there might be some more click-throughs on the dinner table."

That's what those other sites are for.  We come to ZH because it skips the fluff.  I've learned plenty by googling everything on here I didn't understand, and that's the way I like it.

Fri, 03/12/2010 - 05:06 | 263024 Bear
Bear's picture

I think this The Story that will punch a hole in the dam that no one will be able to plug ... there is probably so much here I want the right version and I want everyone to read ZH to get the TD (Truth Detector) expose.  

Fri, 03/12/2010 - 00:57 | 262863 John Self
John Self's picture

I plan to keep frequenting this site, despite the highly unfortunate HP association.

Fri, 03/12/2010 - 01:08 | 262872 ShankyS
ShankyS's picture

Bring the uninformed here. Let them learn the truth. A year ago I did not understand 50% of what I read here. Now I have more knowledge than every rep in Washington and 100% of the economists at the Fed. Thanks TD and crew.

Fri, 03/12/2010 - 00:40 | 262849 Anonymous
Anonymous's picture

I am under the impression that Lehman was not a bank and was therefore not supervised by the Feds.

Fri, 03/12/2010 - 01:04 | 262869 ShankyS
ShankyS's picture

It will all come out in the wash eventually, sadly noting will ever be done to prosecute or punish the criminals. The fraud and deceit is simply unimaginable and I fear there is much more to come. The house of cards will come down and bring everything with it.

Fri, 03/12/2010 - 01:10 | 262873 FischerBlack
FischerBlack's picture

Wow, wow, wow, wow, wow. Just wow.

This is un-fucking-believable. How is it now 2 years later and still not a single indictment? Fucking Einhorn must have known about exactly this. He had a line to one or more of the counterparties, no doubt. We might see Erin Callan in a perp walk. Orange jumpsuit and high heels, baby.

Fri, 03/12/2010 - 01:23 | 262879 chindit13
chindit13's picture

"The accounting profession".  Now there's an oxymoron.

"The Honorable Secretary of the Treasury Timothy Geithner".  Ditto.

"Regulators"  From this day forward, let the term only apply to scuba diving apparatus.

I recall that after Bear went, but when Lehman still had a weak pulse, pundits said LEH would be okay because, "unlike Jimmy Cayne, Dick Fuld has friends".  Well, Jimmy is a nice guy, while Fuld always was an a-hole, and only somebody from NYC ("that Dicky's a goddamn fucking saint, man, a friggin Mensch"), or maybe Rahm Emmanuel, could like the guy.  Stalin without good humor.

The only "friends" Dick Fuld should have should be wearing numbers on their backs and looking for soap drops in the shower.  Alas, he'll be skiing in Aspen with Angelo Mozilo, Ken Lewis, Hank Paulson, etc.  But throw Sergey and that psychic in jail!  Society, and the American Way must be protected.

Fri, 03/12/2010 - 12:20 | 263241 velobabe
velobabe's picture

you got that right, my daughter teaches them skiing. ken lay faked his heart attack in aspen, i know so.

Fri, 03/12/2010 - 01:33 | 262898 Anonymous
Anonymous's picture

BTW (OT) - I got my Zero Hedge hat the other day - all the way to OZ no problem - totally excellent thanks a lot ;-)

'Just Curious' even tho anonymous ;-)

Fri, 03/12/2010 - 03:37 | 262994 i.knoknot
i.knoknot's picture

got some mugs last week...

a most excellent investment.

Fri, 03/12/2010 - 01:47 | 262908 williambanzai7
williambanzai7's picture

VINTAGE REPO 105 SIGN:  http://williambanzai7.blogspot.com/2010/03/vintage-repo-105-warning-sign...

If enough people are interested I will arrange T shirts, Mugs and other deal toys...

Fri, 03/12/2010 - 01:55 | 262915 kote
kote's picture

Not bad... ZH pops up first obviously.

 


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Fri, 03/12/2010 - 01:56 | 262918 Anonymous
Anonymous's picture

This should be the news that finally takes the DJIA above 11K!!!

Fri, 03/12/2010 - 02:00 | 262923 carbonmutant
carbonmutant's picture

" Hector Sants, chief executive of Britain’s Financial Services Authority (FSA), was the only person to refused to be interviewed"

Fri, 03/12/2010 - 02:21 | 262949 Anonymous
Anonymous's picture

Smith and Wesson 500 will solve any problem

Fri, 03/12/2010 - 03:17 | 262979 williambanzai7
williambanzai7's picture

THEY SAVED KEN LAY'S BRAIN: http://williambanzai7.blogspot.com/2010/03/they-saved-ken-lays-brain.html

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Fri, 03/12/2010 - 03:18 | 262980 williambanzai7
williambanzai7's picture

THEY SAVED KEN LAY'S BRAIN: http://williambanzai7.blogspot.com/2010/03/they-saved-ken-lays-brain.html

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Fri, 03/12/2010 - 04:29 | 263019 Alexandra Hamilton
Alexandra Hamilton's picture

Just wondering what happens, if all the depositary institutions, i.e. the ones that have savings accounts, collapse?

It seems that people's savings, retirement accounts, social security and medicare/medicaid will be wiped out but the money in hedge funds and private equity will remain intact...

Fri, 03/12/2010 - 05:00 | 263023 Bear
Bear's picture

I don't think even the arrogance of the Slime Stream Media can let this one go ... evil bankers make too good a story.

This may unravel the whore house of cards ... the populist mood in the Nation has got to seize on this one. When Enron went down it was only the auditors that were nailed, here it looks like everyone could be in on Repo 105. Again dig baby dig ... a Pulitzer is at the bottom (or top) 

Fri, 03/12/2010 - 05:49 | 263031 Bear
Bear's picture

Interesting side note ... after the Enron disclosure and scandal in Oct 2001, the market (SPY) went from 105 to 118 in two months ... as this scandal unfolds we should go from 115 to 128.

Watch out above cover, cover, cover !!!

Fri, 03/12/2010 - 08:14 | 263067 Anonymous
Anonymous's picture

anyone ever take a look at what GMAC is doing?
are they a back door toxic mtg buyer?

Fri, 03/12/2010 - 08:59 | 263086 deadhead
deadhead's picture

Congrats Zero Hedge....makes the headline at HuffPo!!

Judge: Reads Like Best-Seller... Zero Hedge: How Lehman Fooled Everyone

Fri, 03/12/2010 - 09:13 | 263093 Fix It Again Timmy
Fix It Again Timmy's picture

A Ducking Did They Go....

http://www.youtube.com/watch?v=wkwHraMhpmE

 

Fri, 03/12/2010 - 09:36 | 263098 Miyagi_san
Miyagi_san's picture

Ernst and Young was founded on integrity yet they have a lot of explaining to do. Get LAWYERED up MF's

Fri, 03/12/2010 - 10:46 | 263147 Anonymous
Anonymous's picture

Tyler, this must be better than porn. Funny I just did a google search on Erin Callan for fun (the muff diving comment did it), one image that pops up is a news article titled "Lehman's Straight Shooter". Ha.

Fri, 03/12/2010 - 11:14 | 263176 Anonymous
Anonymous's picture

Well, well, well, well, well.

Glad someone finally saw this light on the dashboard.

Btw, here's two tips:

1) Don't eat lead.
2) The counterparty was Barclays for Project Valiha, Knight and Berry.

...the more you know.

Fri, 03/12/2010 - 11:19 | 263181 Anonymous
Anonymous's picture

If this is true.. Then Chris Cox should go to Jail for his lies in the days leading up to the collapse!

Fri, 03/12/2010 - 11:23 | 263185 Gimp
Gimp's picture

Once you realize that WS is one big creative Ponzi Scheme with no oversight then it all makes sense.

Do not feed the beast!

Fri, 03/12/2010 - 11:24 | 263187 Jacks Complete ...
Jacks Complete Lack of Surprise's picture

Sup Tyler,

If you are looking for the counterparty, might I interest you in Project Valiha, Knight or Berry?

I smirk when I see y'all tarring Goldman Sachs, Barclays makes them boys look like street corner punks.

Good thing Barclays bought back their own debt at a discount for Lehman's like a 3rd world despot rooking the IMF, otherwise this entire monkey house of antics would have had the dreaded sunshine.

Fri, 03/12/2010 - 12:46 | 263283 Anonymous
Anonymous's picture

OT - New York Federal Reserve Bank gets tagged "Audit Me":

http://www.youtube.com/watch?v=zTtHOu3Jqyg

enjoy!

Fri, 03/12/2010 - 17:17 | 263672 snakeboat
snakeboat's picture

So I go to the SEC site to send 'em a lil complaint note and twice! now I've ended up with this error when I'm ready to send -> "The browser session has timed out or duplicate submission was attempted. Redirecting to the Home page."

 

Hear no evil. See no evil.

Fri, 03/12/2010 - 22:06 | 263850 Willzyx
Willzyx's picture

L

Sat, 03/13/2010 - 10:24 | 264272 Anonymous
Anonymous's picture

Send in the REPO men to recover Lehmans assets.

http://trailers.apple.com/trailers/universal/repomen/

Sat, 03/13/2010 - 19:34 | 264627 Anonymous
Anonymous's picture

I remember when Fuld was asked about other banks withholding participation in Lehman investment loans, Fuld saying right to our faces as viewers on FNN that he wasn't aware of any facts (or even rumors for that matter) that Lehman was in trouble the very day before the house of cards fell down. Balls all the way with this guy.. looking us all straight in the eye. g

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Tue, 06/01/2010 - 20:56 | 388314 jryan68
jryan68's picture

Hi I work in the industry and I think it’s important to note that SEC Chief Accountant James Kroeker testified last week (http://www.webcpa.com/debits_credits/Finance-Execs-Fret-over-Accounting-...) , “Based on the requests, no information has come to our attention that would lead the staff to conclude that inappropriate practices were widespread.” I think that the recent discovery that Bank of America and Citicorp both used balance sheet management, including the use of repo agreements, shows that this practice was, and is, widespread within the banking community.  (http://online.wsj.com/article/SB1000142405274870479210457526473157297737...))  The SEC must be blind if they cannot find that it is a common practice among banks.  Just look at the facts, including data from the Federal Reserve Bank. In early April, the WSJ (http://online.wsj.com/article/SB2000142405270230483010457517228084893989...) reported that the New York Federal Reserve reported that big banks were masking risk levels by lowering debt before public disclosure. It also highlighted banks' levels of short-term financing in the repurchase, or "repo," market.

Thu, 01/27/2011 - 04:04 | 908707 amandajim
amandajim's picture

incredible "VINTAGE REPO 105 WARNING" sign, yeah probably best in mugs..:) electronic health record software

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jessiejune's picture

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