Friday, March 12, 2010

Why I Really Don't Care About Lehman's Repo 105

The financial media from blogger to mainstream has found something they all want to focus on, Lehman's use of a dodgy accounting technique that Lehman called "Repo 105's". Lehman's use of this accounting gimmick was first brought to light by Lehman's bankruptcy examiner, Anton Valukas, in his 2,200 page report. NYT explains a Repo 105 here.

The problem with this focus is that it is a great misdirection. It takes the focus away from the Federal Reserve, which was the core factor in the financial crisis. Without Federal Reserve money printing, the financial crisis would not have happened.

Yes, Repo 105 is a stretch of accounting standards beyond stretches, and should be debated and discussed by accountants whenever they have conventions, but that should be the beginning an end.

What I am waiting for is an Anton Valukas 5,500 page report on what is going on at the Fed.

5 comments:

  1. Wenzel,

    What I am waiting for is an Anton Valukas 5,500 page report on what is going on at the Fed.

    I began holding my breath on a disclosure like this in 1913 and died from asphyxiation. Luckily, I believed in reincarnation and managed to be reborn and here I stand before you today, once again contemplating holding my breath on this issue.

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  2. I wrote this the week of Lehman's fall after exploring their SEC filings:

    http://peureport.blogspot.com/2008/09/derivatives-off-balance-sheet-items.html

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  3. For introspection to happen, the system has to fall victim to its inevitable demise. The Fed system is unsustainable. What is not sustainable, cannot be sustained :)

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  4. The Fed played a role in Lehman's shenanigans:

    http://www.nakedcapitalism.com/2010/03/ny-fed-under-geithner-implicated-in-lehman-accounting-fraud.html

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  5. Who gives a shit is right. After Madoff, the SEC needs to up its rep. Fuld should look into some nice long term vacation packages. Wouldn't be surprised if Goldman's behind this one too. Fucking savages.

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