Friday, March 12, 2010
Geithner develops recall problems
Lehman employed off-balance sheet devices, known within Lehman as “Repo 105” and “Repo 108” transactions, to temporarily remove securities inventory from its balance sheet, usually for a period of seven to ten days, and to create a materially misleading picture of the firm’s financial condition in late 2007 and 2008.
and Lehman, according to Timothy Geithner, was a"solvent institution" since the Fed only lends to "solvent" institutions.
Furthermore, staffers from the NY Fed were intimately aware of Lehman:
From 2003 to 2009, Treasury Secretary Timothy Geithner served as President of the Federal Reserve Bank of New York (“FRBNY”). The Examiner described to Secretary Geithner how Lehman used Repo 105 transactions to remove approximately $50 billion of liquid assets from the balance sheet at quarter-end in 2008 and explained that this practice reduced Lehman’s net leverage. Secretary Geithner “did not recall being aware of” Lehman’s Repo 105 program, but stated: “If this had been a bank we were supervising, that [i.e., Lehman’s Repo 105 program] would have been a huge issue for the New York Fed.”
Jan Voigts, who was an Examining Officer in FRBNY’s Bank Supervision Department, had no knowledge of Lehman removing assets from its balance sheet at or near quarter-end via a repo trade treated as a true sale under a United Kingdom opinion letter.
Arthur Angulo, who was a Senior Vice President in FRBNY’s Bank Supervision department, likewise was unaware that Lehman engaged in repo transactions at quarter-end.
And Dick Fuld couldn't recall this either!
So how large is this Repo that no-one remembers, that masked Lehman's books?
$36, $38 or $49 billion! Billion! With a B!
That they, the FRBNY supervisors, the CEO of Lehman and Timmy Geither, just can't recall!
Because at least those banks, won't have books cooked like the money centers!
Posted by Palmoni at 8:10 AM