Items of Interest:
Barry Ritholtz / The Big Picture:
Accounting Fraud, Short Sellers & the SEC -- The bankruptcy report on Lehman is both revealing and damning. Once again, the investing public learns — after the fact — the basic truisms of modern markets:
-Major accounting firms are worthless to investors. They were either unable or unwilling to detect fraud amounting to 50 billion dollars. The incompetents at Ernst & Young deserve the same fiery death as Arthur Anderson; Whether they are hired guns or paid whores, they — like the rating agencies — are worthless to investors.
-Corporate management engages in fraud all too regularly: Am I reading this correctly — that Dick Fuld’s defense will be “I didn’t know that Lehman was a giant Ponzi scheme, and I was unaware we were hiding billions in bad debt and leverage off balance sheet?”
Based on the release of the bankruptcy court report, LEH was technically insolvent perhaps years before it collapsed;
-The Shortsellers turn out to be the good guys. Consider the absurdity fraud of “protecting” the bankster frauds — fromt he truth, as revelaed by Einhorn et. al.
-The SEC is utterly incapable of comprehending how markets function. They believe the criminals who commit the fraud, and ignore the whistleblowers who uncover it;
-The ban on short selling is an indictment of the inability of the SEC to understand WTF is going on, and a reward tot he criminal corporate management teams;
-The Media did a terrible job uncovering the fraud as well. Some media folk were used by CEOs. Some of the TV press who relied on access to their subjects, actually rallied to the defense of these CEOs, including Fuld, and trashed the short sellers. Most notably Charlie Gasparino from his CNBC days, but their were others as well.
-The Analyst community, for the most part, failed as well. The few who publicly acknowledged the debacle were notable for being so far outside of the herd. 95% of them were wrong.
The Big Picture: Charlie Gasparino Owes David Einhorn (and me) an Apology
The Big Picture: Did JPM and Citi Cause Lehman’s Collapse?
The Big Picture: Coroner’s Post Mortem on Lehman
Justin Lutz / New Deal 2.0: “All you need to know to navigate today's economic debate.”Charles Lemos / MyDD: A Lehman Post-Mortem Points to Corporate MalfeasanceJordan Weissmann / The BLT: The Morning Wrap — Howrey Horror Story: After a sour financial …The Daily Caller: Lehman Brothers hid borrowing, Geithner may bear some responsibility
Karl Denninger / The Market Ticker:Chris / AMERICAblog News: Lehman insolvent weeks before bustMikkel Fishman / The Moderate Voice: ‘NY Fed Under Geithner Implicated in Lehman Accounting Fraud’
Myglesias / Matthew Yglesias: The Fraud Factor
BusinessWeek: Lehman Report Points Way To Plaintiffs, Not Prison
Jeff Matthews: Lehman Brothers: “Another Drug We R On”
Wall Street Journal:
Examiner: Lehman Torpedoed Lehman
DealBook: The Origins of Lehman's ‘Repo 105’Ashby Jones / Law Blog: When U.S. Firms Balked at Lehman's Moves, Lehman Took them EastThe Page: Lehman Report Scathing