Lehman's advisers were guard dogs that didn't bark

[Bozita]

http://www.guardian.co.uk/business/2010/mar/14/lehman-brothers-linklaters-ernst-young

Lehman's advisers were guard dogs that didn't bark
By their silence, the failed bank's lawyers and accountants gave highly questionable practices a sheen of respectability

Heather Stewart
The Observer, Sunday 14 March 2010
Article history


It's good to know we still lead the world in something. "Business services" is often cited as one of Britain's proudest export industries, and last week's postmortem on the collapse of Lehman Brothers from the US "examiner" brought some formidable examples of its recent triumphs.

"Magic circle" City law firm Linklaters gave the thumbs-up to "Repo 105", the complex manoeuvre that allowed the ailing Lehman to book short-term loans from other banks as "sales", effectively disguising billions of dollars of assets, sometimes conveniently just as the end of a quarter approached. Herbert McDade, the man known inside the bank as its "balance sheet tsar", described the instruments in an email as "another drug we're on".

-snip-

Auditor Ernst and Young is even more firmly in the examiner's sights. He says it was "professionally negligent" in passing the Repo 105 arrangements, which will be music to the ears of the many creditors and shareholders itching to take class-action cases against anyone they might be able to blame for the firm's catastrophic bankruptcy.

The examiner also reports that senior Lehman banker Matthew Lee sounded the alarm about "accounting improprieties" in the summer of 2008, referring specifically to $50bn of repo arrangements, but Ernst and Young "took virtually no action to investigate".

Of course, Linklaters and Ernst and Young will say they were only following the rules, but auditors and lawyers are professionals and they gave Lehman's highly questionable practices a sheen of respectability.

-snip-

more...

[theoldman]

1. Lehman's cooked the books just like all the other investment companies.

The only difference is that Lehman did not have anyone to bail them out. The book SELLOUT gives a detail account of most of the Wall Street companies.

[indepat]

3. Wow! Wonder how G&S woulda' fared were it left to fend for itself without the funding from

WB and bailout by the Feds. :)

[AllentownJake]

2. Yes the professional class

Is very busy selling schemes and other bullshit called consulting. Was in the business for a year, my clients would have been smarter to try to develop their own talents for their needs.

It is rather silly to think that an outsider understands what you do better than you do.

[Bozita]

4. kick for the Sunday afternoon crowd