Here's Why Lehman's Accounting Was Completely Bogus -- And Why The Rest Of Wall Street's Still Is
John Hempton | Mar. 21, 2010, 8:54 AM
I agree with Felix Salmon that the former Lehman staffers who defend Repo 105 are psychopaths – certifiably insane. They state (as if this justifies it) that …
The only people who would worry about using an old trick to reduce leverage from 13.9 to 12.1, are “yappers who don’t know anything.”
For those that don’t know Repo 105 was a sale and repurchase agreement by which Lehman parked about 50 billion in assets (presumably assets they did not want to discuss) overnight via a repo transaction so they would not appear on the balance sheet.
By now anyone who does not realize that sort of accounting legerdemain is unacceptable is (a) entirely out of touch with reality and (b) self aggrandizing on a magnificent scale. Both are signs of mental illness. more