It is difficult to be shocked about new revelations stemming from the financial crisis, but today’s DealBook column by Andrew Ross Sorkin was a real revelation. S.E.C. examiners, working during the watch of Christopher Cox as S.E.C. commissioner, apparently saw nothing wrong with Repo 105. Read this article for more details.
Attempting to understand the sequence of events that led to the downfall of Lehman Brothers is normally a mind numbing process, but occasionally an obvious outrage is discovered such as Lehman’s use of “Repo 105” transactions. While we have not perused the 2,200 page bankruptcy examiner’s report, enough information has been reported to draw some conclusions. While Lehman’s top management deserves much criticism and blame, the firm’s auditors were derelict in their responsibilities as well. Whether Ernst & Young is legally culpable is an open question. However, it is obvious that the firm acted as an “enabler” to Lehman’s management when it came to the use of Repo 105. Read this article for more details.
In a pattern that would be amusing if it was not so disturbing, we are again witnessing the spectacle of lawyers for a disgraced CEO who claim that their client was “unaware” of key risks that led to the downfall of their firm. The Lehman Brothers bankruptcy examiners report has been widely covered in the business media over the past few days and, at a minimum, paints a picture of shocking incompetence and an intent to mislead among Lehman’s senior management team. It is the type of scenario in which a former CEO’s only defense appears to rest on claims that he was incompetent rather than criminally negligent. Read this article for more details.
Most outside observers had difficulty keeping up with all of the momentous events of the weekend of September 14-15, 2008 with all of the twists and turns that finally led to Lehman Brothers’ historic bankruptcy filing, Bank of America’s purchase of Merrill Lynch, and AIG’s bailout only a few days later. Ever since that tumultuous period, there has been a need for a comprehensive book covering the behind the scenes events. Andrew Ross Sorkin’s Too Big To Fail has succeeded in delivering exactly what is needed to gain a better understanding of what actually took place. Read this article for a detailed review and thoughts on “lessons learned”.
Warren Buffett has often said that there are no called strikes in the field of investing. Investors are presented with a series of “pitches” every business day by the market but there are no penalties for failing to swing other than the potential to miss out on interesting opportunities. Read this article for more information on the pitches Mr. Buffett passed on in 2008.