Rep 105 sounds like a schlock movie not fraudulent accounting trick used by Lehman Brothers before bankruptcy. Now Bank of America is implicated
John Hempton, a noted commentator on financial affairs, has pointed out that Bank of America may have been up to the same trick. As per usual, he forgives the fraud artists in the end.
Repo 105’s antecedents Ken Lewis
I agree with Felix Salmon that the former Lehman staffers who defend Repo 105 are psychopaths – certifiably insane. They state (as if this justifies it) that …
The only people who would worry about using an old trick to reduce leverage from 13.9 to 12.1, are “yappers who don’t know anything.”
For those that don’t know Repo 105 was a sale and repurchase agreement by which Lehman parked about 50 billion in assets (presumably assets they did not want to discuss) overnight via a repo transaction so they would not appear on the balance sheet. Continue reading