Wall Street Pattern: Fraud & Lies while Timothy Geithner as then Head of NY Fed Derelict or Culpable for Aiding & Abetting

No wonder regular Americans are angry.  While tens of millions of them are unemployed, and others struggling with stagnant wages, all those Wall Street gazillionaire crooks who caused this economic catastrophe were given hundreds of billions of taxpayers' dollars, courtesy of a no questions asked bailout by the Bush and Obama administrations.

We learn more every day about Wall Street's greedy criminals who continue their fraudulent business as usual

Like the following reported in the NYTimes: "It is the Wall Street equivalent of a coroner’s report — a 2,200-page document that lays out, in new and startling detail, how Lehman Brothers used accounting sleight of hand to conceal the bad investments that led to its undoing.

"But the examiner, Anton R. Valukas, also for the first time, laid out what the report characterized as “materially misleading” accounting gimmicks that Lehman used to mask the perilous state of its finances. The bank’s bankruptcy, the largest in American history, shook the financial world. Fears that other banks might topple in a cascade of failures eventually led Washington to arrange a sweeping rescue for the nation’s financial system.

"According to the report, Lehman used what amounted to financial engineering to temporarily shuffle $50 billion of troubled 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.

"Richard S. Fuld Jr., Lehman’s former chief executive, certified the misleading accounts, the report said.

“ '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.

" 'Mr. Fuld was “at least grossly negligent,' the report states, adding that Henry M. Paulson Jr., who was then the Treasury secretary, warned Mr. Fuld that Lehman might fail unless it stabilized its finances or found a buyer.

"Lehman executives engaged in what the report characterized as “actionable balance sheet manipulation,” and “nonculpable errors of business judgment.”

And this from Naked Capitalism: "The unraveling isn’t merely implicating Fuld and his recent succession of CFOs, or its accounting firm, Ernst & Young, as might be expected. It also emerges that the NY Fed, and thus Timothy Geithner, were at a minimum massively derelict in the performance of their duties, and may well be culpable in aiding and abetting Lehman in accounting fraud and Sarbox violations.

"We need to demand an immediate release of the e-mails, phone records, and meeting notes from the NY Fed and key Lehman principals regarding the NY Fed’s review of Lehman’s solvency. If, as things appear now, Lehman was allowed by the Fed’s inaction to remain in business.....the NY Fed at a minimum helped perpetuate a fraud on investors and counterparties.

"And most important, it says that the NY Fed, and likely Geithner himself, undermined, perhaps even violated, laws designed to protect investors and markets. If so, he is not fit to be Treasury secretary or hold any office related to financial supervision and should resign immediately.

"It is time for Geithner to go. He is not fit to serve as Treasury secretary."

Many of us were appalled when Obama nominated Geithner.  Then again, it speaks volumes about Obama.

 

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