The Dylan Ratigan does a pretty good job of explaining the 2200 page report that exposes the Lehman scandal. It shines a bright light on why we need financial regulations and serious reforms.

The NY Times:

The bankruptcy examiner’s report filed by Anton R. Valukas on the 2008 demise of Lehman Brothers discusses some accounting gimmicks that are eerily reminiscent of how Enron tried to prop up its balance sheet back in 2001 before it collapsed. Both companies appear to have played right along the edge of properly accounting for transactions designed to make them appear much stronger than they turned out to be, becoming steadily more aggressive as they teetered on the brink of ruin.

The examiner’s report discusses potential claims that the bankruptcy trustee can bring against Lehman’s former officers and outside advisers and does not mention potential government law enforcement action.

Reading his report, however, gives strong indications that at a minimum the Securities and Exchange Commission is likely to pursue civil charges for securities fraud, and that criminal charges are certainly possible against Lehman’s former top executives. The examiner’s report gives us a new term for hiding problems on a corporate balance sheet that may become common parlance: “Repo 105.” Starting in 2001, Lehman Brothers engaged in repurchase agreements, called “repos,” which were described by DealBook as “what amounts to a short-term loan, exchanging collateral for cash up front, and then unwinding the trade as soon as overnight.”

Read here for more of the story.

Market Watch:

The report, which runs to 2,200 pages, said former top officers including ex-CEO Dick Fuld and Chief Financial Officers Chris O'Meara, Erin Callan and Ian Lowitt could face legal claims for negligence of breach of duty.

Auditor Ernst & Young could also potentially face a professional malpractice claim for not challenging Lehman's non-disclosure of the off-balance sheet transactions, the report said. See full story on the Lehman report.

Lehman's collapse in 2008 really got things going.

Lehman Brothers, the fourth-largest US investment bank, has filed for bankruptcy protection, dealing a blow to the fragile global financial system.

The news led to sharp falls in share prices around the world, and officials took measures to reassure markets. Lehman had incurred losses of billions of dollars in the US mortgage market.

--

US Treasury Secretary Henry Paulson said the US was "working through a difficult period in our financial markets right now as we work off some of the past excesses".

But he added: "The American people can remain confident in the soundness and resilience of our financial system."

However he warned that uncertainty remained and it was likely that there would be further "rough spots" ahead before the market was corrected.

Turmoil would continue in financial markets until the housing correction was completed, he added.

Mr Paulson said he was committed to working with regulators in the US and abroad, as well as policymakers in Congress to take the necessary steps "to maintain the stability and orderliness of our financial markets".

But he gave no details of what such steps might mean.

And remember these magical words by President George Bush?

Earlier in the day President George W Bush said: "In the long term I am confident that our financial markets are flexible and resilient and can deal with these adjustments."

This BBC article brings back really bad memories, but I hope they remind the Congress to get financial reform done, now.

The thing no one in power likes to talk about is, for capitalism to function, there has to be a way to accurately assess risk. Now we know that there is simply no way to know what anyone on Wall Street is actually doing. You'd think that both Republicans and Democrats could agree on the need for strict regulation and transparency, but so far you'd be wrong:

It was like a hidden passage on Wall Street, a secret channel that enabled billions of dollars to flow through Lehman Brothers.

In the years before its collapse, Lehman used a small company — its “alter ego,” in the words of a former Lehman trader — to shift investments off its books.

This was reported last month in the bank examiner's report of Lehman's collapse:

The examiner, Anton R. Valukas, refers repeatedly to “Repo 105,” a name for a set of accounting tactics originated by Lehman that temporarily shuffled about $50 billion off the firm’s balance sheet for the two fiscal quarters before it collapsed.

You read that right: $50 billion.

The firm, called Hudson Castle, played a crucial, behind-the-scenes role at Lehman, according to an internal Lehman document and interviews with former employees. The relationship raises new questions about the extent to which Lehman obscured its financial condition before it plunged into bankruptcy.

While Hudson Castle appeared to be an independent business, it was deeply entwined with Lehman. For years, its board was controlled by Lehman, which owned a quarter of the firm. It was also stocked with former Lehman employees.

None of this was disclosed by Lehman, however.

Entities like Hudson Castle are part of a vast financial system that operates in the shadows of Wall Street, largely beyond the reach of banking regulators. These entities enable banks to exchange investments for cash to finance their operations and, at times, make their finances look stronger than they are.

Critics say that such deals helped Lehman and other banks temporarily transfer their exposure to the risky investments tied to subprime mortgages and commercial real estate. Even now, a year and a half after Lehman’s collapse, major banks still undertake such transactions with businesses whose names, like Hudson Castle’s, are rarely mentioned outside of footnotes in financial statements, if at all.

The Democrats are so strangely self-destructive at times, I have to say this: Please tell me they're not only investigating Democrats, but Republicans, too. Because that would just be stupid. I mean, we didn't bother going after Republican war criminals - so why single out Democrats?

House ethics investigators have scrutinized the activities of more than 30 lawmakers and several aides in inquiries about issues including defense lobbying and corporate influence peddling, according to a confidential House ethics committee report prepared in July.

The report, disclosed on a publicly accessible computer network, was made available to The Washington Post by a source familiar with such networks.

The ethics committee is one of the most secretive panels in Congress, and its members and staff members sign oaths not to disclose any activities related to its past or present investigations. Watchdog groups have accused the committee of not actively pursuing inquiries; the newly disclosed document indicates the panel is conducting far more investigations than it had revealed.

Shortly after 6 p.m. Thursday, the committee chairman, Zoe Lofgren (D-Calif.), interrupted a series of House votes to alert lawmakers about the breach. She cautioned that some of the panel's activities are preliminary and not a conclusive sign of inappropriate behavior.

"No inference should be made as to any member," she said.

The Huffington Post:

MSNBC announced a slate of changes this afternoon, leading with their new election-themed show: "Race For The White House" with David Gregory. The NBC White House correspondent has been a utility player at NBC/MSNBC for some time, regularly stepping in as a guest host — and demonstrating his range — on the "Today Show" and "Meet The Press." Gregory also took over the timeslot left vacant by Don Imus last April, temporarily stepping in to the breach before the network began trying out different hosts in that timeslot. The show will premiere on March 17th. Read on...

He's no Rachel Maddow, but perhaps MSNBC believes she needs more camera time before she's ready for her own show. Gregory has blamed the blogs for the polarization of American politics and is hit and miss in the reality based, hard hitting journalism arena so we'll have to keep an eye on him. This is a real missed opportunity for MSNBC.

Ahem. Media Bloodhound is covering a fascinating breach of journalistic ethics. ABC news discovered they couldn't verify the credentials of their terrorism "analyst" Alexis Debat as having a degree from the Sorbonne, and it turned out he might have fabricated an interview with Barack Obama. Perhaps most serious are questions as to when ABC was using Debat as an information source and when he was a reporter paid by the network. It is clear that his producers loved some of the sensational stories he covered about "possible" post 9/11 terrorist plans.

It is also fact that Debat was on the payroll of ABC and a necon think tank at the same time.

[Debat was] quoted and used as a source for multiple post-9/11-related stories for the rest of 2001 and much of 2002, finally officially earns the title “ABC News consultant” in addition to “former French Defense Ministry official” in a story about how Zacharias Moussaoui, the infamous “20th hijacker” - according to “French intelligence authorities,” which in this case appears to be, well, Debat – was actually “part of a second wave of suicide hijackings planned for early 2002 in Europe and the United States.” Read more....

Is it any wonder that the blogs are taking over journalism? I can't imagine any blogger getting away with making up an interview with Barack Obama. Blog readers would catch that before you could say "the audacity of hope." Perhaps viewers who get their news primarily from television are more passive and therefore have lower standards? Naah.

Update:  Media Bloodhound has posted updated information on this story here...

Welcome To Bedwetter Nation:

We are now officially a nation of hysterics:

Two people who sprinkled flour in a parking lot to mark a trail for their offbeat running club inadvertently caused a bioterrorism scare and now face a felony charge. The sprinkled powder forced hundreds to evacuate an IKEA furniture store Thursday.

New Haven ophthalmologist Daniel Salchow, 36, and his sister, Dorothee, 31, who is visiting from Hamburg, Germany, were both charged with first-degree breach of peace, a felony. Read more...

A Tiny Revolution: Why did Australian wheat executives know we were going to invade Iraq 13 months before American citizens did? Was it because AWB was paying miIliions of dollars in kickbacks to Saddam Hussein's regime in exchange for securing wheat contracts under the UN's oil-for-food contract in a direct breach of UN sanctions?

For The Record: Interview with the Consortium News', Robert Parry.  A man who a friend calls one of the wisest and most knowledgeable voices in the nation.  Also, go watch Thomas Schaller, author of "Whistling Past Dixie: How Democrats Can Win Without the South", on the Nov.22 edition of Washington Journal (slide the timer to 46:25). Schaller is an unapologetic democrat who stuffs wingnut talking points back down their throats. (h/t CW)

Daily Howler: If he wanted to, President Bush could change the tone in Washington with a single syllable: He could just say "ic." That is, he could stop referring to the opposition as the "Democrat Party" and call the other side by it's actual name: the Democratic Party

Red State Son: Usually a source of thoughtful, well written commentary, Mr. Perrin takes the holiday off and offers instead a few visual treats which remind us what TV talk shows used to be like -- creative people having intelligent conversations that lasted more than five minutes.

Progressive Blog Digest: Is composed of clips and links from other progressive blog and news sites, accompanied editorial observations and opinions.  Nick's mission is, "to get this information into the hands of as many people as I can."

HOLY CRAP: Student tapes Christianist teacher proselytizing in class--and the Christianist lies about it! ...Dobson: I Want To Cure Ted Haggard of Being Gay But Don’t Have Time...People refuse to believe in God because...? One in a sixteen-part series on the rise of the Catholic Right

Bush refused to accept Gregory's question which is very relevant to the discussion about Article III. It was never vague before. As Ezra says,

This is by far the pissiest press conference Bush has given. He's furious. I assume his feet are manacled behind the microphone. Otherwise, he'd be stalking across the stage, tearing apart the podium, and occasionally leaping into the crowd to rip out David Gregory's heart...read on

Download | play -QT Download | play -WMP (h/t Paula)

Digby has more..

Balkinization:

Instead, the question must be placed in its historical and international context -- namely, whether Congress should grant the Executive branch a fairly unbounded discretion to use such techniques where such conduct would place the United States in breach of the Geneva Conventions.

Continue reading »

Calling Rupert Murdoch.

"A New York Post Page Six staffer solicited $220,000 from a high-profile billionaire in return for a year's "protection" against inaccurate and unflattering items about him in the gossip page, the Daily News has learned. In two 90-minute meetings, characterized by a shocking breach of ethics, Jared Paul Stern, a fixture on the city's gossip scene who also edited Page Six The Magazine, asked for a series of payments from Ron Burkle, the managing partner of Yucaipa Cos., a conglomerate with interests in supermarkets, celebrity clothing lines, and media."

Someone email Deborah Orrin, one of Chris Matthews favorite pundits and ask her for her thoughts. Maybe the Podman too.

Murray Waas nails Pat Roberts. When are the investigations coming for him? Don't hold your breath.

"On March 20, 2003, at the onset of military hostilities between U.S. and Iraqi forces, Roberts said in a speech to the National Newspaper Association that he had "been in touch with our intelligence community" and that the CIA had informed President Bush and the National Security Council "of intelligence information from what we call human intelligence that indicated the location of Saddam Hussein and his leadership in a bunker in the suburbs of Baghdad."

The former intelligence officials said in interviews that Roberts was never held accountable for his comments, which bore directly on the issue of intelligence-gathering sources and methods, and revealed that Iraqis close to Hussein were probably talking to the United States.

These former officials contrasted the Roberts case with last week's firing of CIA officer Mary O. McCarthy, as examples of how rank and file intelligence professionals now have much to fear from legitimate and even inadvertent contacts with journalists, while senior executive branch officials and members of Congress are almost never held accountable when they seriously breach national security through leaks of information....read on