Guardian UK: Accounting for Lehman, or Enron Pt 2

[marmar]

Accounting for Lehman, or Enron Pt 2
Lucy Prebble has brilliantly dramatised Enron's accounting scams, but it seems Lehman Brothers perfected the dark art

Dan Roberts
guardian.co.uk, Monday 15 March 2010


No one who has seen Lucy Prebble's play about the collapse of Enron can forget the velociraptors. These menacing, red-eyed dinosaurs are used to represent the company's unique contribution to the financial hall of shame: accounting monsters created to gobble up debt and hide it from shareholders with a brazenness they could never imagine.

But the so-called "special purpose entities" (named Raptors 1 to 4 by Enron finance director Andrew Fastow) were perhaps not so unusual, after all. When the time comes to stage our most recent financial drama, theatre directors might want to take a closer look at the beasts that Lehman Brothers kept chained in the shadows.

A 2,200-page legal report into the bank's demise revealed last week a similar addiction to accounting hallucinogens. Until now, the big mystery was how the Wall Street giant could have been reporting healthy profits right up until the moment it keeled over and died – bringing most of the west's economies down with it. But the latest investigation reveals financial transactions known as Repo 105 and Repo 108, used to temporarily remove tens of billions of dollars of debt from the bank's balance sheet at the end of every accounting period.

As the banking crisis grew, so did Lehman's addiction to such trickery and the harder it became to come clean. Executives even referred to Repo 105 as "another drug we're on" in emails uncovered by the report. .........(more)

The complete piece is at: http://www.guardian.co.uk/commentisfree/2010/mar/15/lehman-brothers-accounting-enron

[Solly Mack]

1. k/r

[DJ13]

2. Im noticing these Lehman stories of the last several days

never mention Goldman Sachs was partly responsible for pushing them over the edge.

[Demeter]

3. Apparaently a Stiff Breeze Would Have Pushed Lehmans Over the Edge

They were a criminal fraud.