Berkshire Hathaway Vice Chairman Charlie Munger rarely gives interviews, and when he does investors are wise to listen carefully. In the following CNBC interview with Becky Quick, Mr. Munger provides his general views regarding investment banking and says that Richard
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.