Academic

The Lehman Examiner's Report

By Gordon Smith, Christine, Hurt, Vic Fleischer, Fred Tung, Lisa Fairfax, David Zaring

I've often wondered when the white collar prosecution part of the financial crisis would happen (it happened in Enron, after all, and a thousand prosecutions were launched by the S&L crisis of the 1980s), and when an accounting expert characterizes your use of an accounting rule "to create a materially misleading picture of the firm?s financial condition in late 2007 and 2008," you've got a criminal fraud problem.  Of course, many bankers say that the use of Lehman by Repo 105 was window dressing - and they have a point; the real problem for Lehman and other insolvent financial institutions was the decision to keep exposure to the American housing market on their balance sheets.

So who should we believe?  The bankers or the accounting expert?  I still expect prosecutions ... but then I'm biased, given that said expert - and the Congressional Oversight Panel - cited the Davidoff/Zaring paper on the financial crisis.

Full post as published by Conglomerate on March 17, 2010 (boomark / email).