March 20, 2010 archive

Open Thread

Chris Dodd Asks Department Of Justice To Probe Lehman’s Repo 105 And Other Firms’ Shady Accounting Practices   Zero Hedge

March 19, 2010

The Honorable Eric H. Holder, Jr.

Attorney General of the United States

United States Department of Justice

950 Pennsylvania Avenue, NW

Washington, D.C.  20530

Dear Attorney General Holder:

I am deeply concerned about the facts that have come to light regarding the demise of Lehman Brothers and the accounting manipulation that contributed to it. I respectfully ask you to commission a task force to investigate the Lehman situation as well as other companies that may have engaged in similar accounting manipulation with a view to prosecution of employees or agents who contributed to any violations of the law.    

According to the Report of the U.S. Trustee-appointed Examiner Anton R. Valukas, Lehman presented a misleading picture of its financial condition to the public by using extensive repurchase agreements known as Repo 105 transactions. The Examiner found that “Lehman did not disclose its use — or the significant magnitude of its use — of Repo 105 to the Government, to the rating agencies, to its investors, or to its own Board of Directors.” The result was to conceal its holdings of bad assets and to temporarily remove approximately $50 billion of assets from its balance sheet at the end of the first and second quarters of 2008. The Examiner found that Lehman used Repo 105 transactions for no other articulated purpose than to shrink its balance sheet at the quarter-end, in a manner that deceived investors and creditors about its true financial state and misleading others.    

We must work tirelessly to reduce the incidence of financial fraud in order to restore trust and confidence in the financial markets. A task force investigation and taking appropriate Federal actions in these matters will contribute to these goals.

Sincerely Christopher J. Dodd Chairman

It’s a veritable calliope of tea kettles a-whistling through the tubes.  First, from zerohedge, the Fed has lost its Freedom of Information Act disclosure requirement to Bloomberg news, and now must apparently reveal some bank names and lending practices surrounding the bail-out:

Key selection from the Second Circuit’s Fed FOIA appeal:

The requirement of disclosure under FOIA and its proper limits are matters of congressional policy. The statute as written by Congress sets forth no basis for the exemption the Board asks us to read into it. If the Board believes such an exemption would better serve the national interest, it should ask Congress to amend the statute.

In other words: if the Fed wants to maintain its strict secrecy, it better get Congress to change the laws immediately. Of course, if that happens it will become very clear who controls not just the fiscal and monetary destiny of America, its executive control (via the recently institued bilateral decision making of who apoints who – the President of the United States <-> The President of the FRBNY, and vice versa ), but also the legislative. As for the judicial, we will know definitively when the Supreme Court overturns this decision. In other words, the Federal Reserve is about to become the President, the Congress and the Supreme Court (not to mention Wall Street) all rolled into one.

This could be a terrible blow to secrecy and the shadow banking/government system.

THE LADIES’ SECTION

Japan Airlines announced that it would disband its powerhouse women’s basketball team, known as the Rabbits, after the 2010-11 season due to its financial woes.

A 13-year-old girl in Kagoshima diagnosed with gender identity disorder will be allowed to attend school as a boy starting in April.

A retired Japanese diplomat was acquitted by an Athens court for the murder of his daughter in 2008, but his Greek wife was sentenced to life in prison for the crime.

A judge in Nara tossed out a lawsuit by the family of a 32-year-old woman who died during childbirth after being turned away by 19 hospitals.

The owner of a ryokan in Shizuoka has converted part of her facility into a museum to memorialize an incident 42 years ago in which a desperate Japanese-Korean man holed up in the inn for five days after killing two yakuza.

The featured song this week was originally written and performed in 1967 by one of the most successful rock groups of all time.  Even though this week’s selection should sound instantly familiar to most, it never reached the Billboard Top 40 charts. Cover versions of this song rose to #1 three times in the U.K., beginning in the 1960s and resurfacing during alternating decades to follow.  

Despite its lack of success as a single in this country, the album on which it appeared, for my money, is the best of all time, and was #1 on Rolling Stone magazine’s list of the 500 Best Albums of All Time. The song itself was ranked at #304 on Rolling Stone’s list of the 500 Greatest Songs of All Time.

This week’s selection has also surfaced in various films and was used as the opening theme song for a popular television series during the late 1980s and early 1990s.  

cross-posted from Sum of Change

I was originally writing something up on the conservative response to Lt. Dan Choi’s arrest when I wrote this sentence: “If conservatives want us to stop equating their homophobia to the racism that the civil rights movement experienced, they should stop using the same talking points.” I decided to write the following instead of a typical conservatives-freak-out-at-liberal-activism post.

Let us play a game. I am going to give you a quote about the bigotry of the armed forces. I will redact all names, dates, and any words along the lines of “homosexual”, “gay”, “sexual orientation”, “black”, “negro”, “race.” You try to guess what kind of bigot these perfectly rational arguments came from, homophobic or racist! Sounds fun, right?