Lehman's False Accounting Was Known By SEC and NY Fed Regulators -- Yet They Did Nothing
Mar 16, 2010 at 3:43 PM
DailyBail in SEC, federal reserve, geithner, geithner, lehman, lehman, ny fed, regulation, sec

(L to R) Federal Reserve Chairman Ben Bernanke testifies while SEC Chairman Christopher Cox Under Secretary of Treasury for Finance, Robert Steele and President of the Federal Reserve Bank of New York, Timothy Geithner listen during a Senate Banking, Housing and Urban Affairs Committee hearing on Capitol Hill April 3, 2008 in Washington DC. Bernanke defended the Feds moves to prevent the failure of Bear Stearns investment bank, saying that its failure could have dealt the U.S. and world economy serious damage.


At most times there were at least a dozen regulators from the SEC and New York Federal Reserve stationed within Lehman Brothers, with unfettered access to Lehman's financials including the Repo 105 transactons.  And they were tipped by a whistleblower.  Yet they said nothing.

Hello, Mr. Geithner.  Yes, I'm here to deliver another nail for your coffin.

From NYT Dealbook

Lehman Brothers executives weren’t the only ones in the building when they were moving billions of dollars in liabilities off their books at the end of each quarter with magic accounting. So were the Feds, The New York Times’s Andrew Ross Sorkin writes in his latest DealBook column.

Regulators like the Securities and Exchange Commission and the New York Fed sent emergency teams to monitor most of the big banks after the collapse of Bear Stearns. They had constant access to Lehman’s books, and not just the dolled up quarterly reporting. So where was the government while all this “materially misleading” accounting was going on?

It now appears that the federal government itself either didn’t appreciate the significance of what it saw (we’ve seen that movie before with regulators waving off tips about Bernard L. Madoff). Or perhaps they did appreciate the significance and blessed the now-suspect accounting anyway, Mr. Sorkin writes.


Read the column from Andrew Sorkin  >>



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