How Lehman Hid Its Woes

I wanted to share a bit about the recent release of the "coroner's report" on the demise of Lehman Brothers. A friend of mine actually helped with the 2,200 page summary of the downfall, and I thought you might be interested in the highlights from the New York Times article, "Report Details How Lehman Hid Its Woes"

According to the report, Lehman used what amounted to financial engineering to temporarily shuffle $50 billion of assets off its books in the months before its collapse in September 2008 to conceal its dependence on leverage, or borrowed money. Senior Lehman executives, as well as the bank’s accountants at Ernst & Young, were aware of the moves, according to Mr. Valukas, the chairman of the law firm Jenner & Block and a former federal prosecutor, who filed the report in connection with Lehman’s bankruptcy case.

“Unbeknownst to the investing public, rating agencies, government regulators, and Lehman’s board of directors, Lehman reverse engineered the firm’s net leverage ratio for public consumption,” Mr. Valukas wrote.

Its pretty crazy that behemoths like Lehman can get away with such behalf and walk away from it without criminal prosecution. You'd think that striping millions of their livelihoods would constitute criminal behavior.

Your thoughts?

Miel