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Lehman Brothers Inc.


Self Description

September 2002: "Lehman Brothers is a global investment bank serving the financial needs of corporations, institutions, governments and high net worth investors worldwide. Lehman Brothers actively participates in the global capital markets through a closely integrated network of offices anchored by a worldwide headquarters in New York and regional headquarters in London and Tokyo. Since Lehman Brothers was founded in 1850, it has built a global reputation for providing state-of-the-art research, distribution, trading and financing services."
http://www.lehman.com/who/history/index.htm

Third-Party Descriptions

January 2013: "The sweeping impact of these crucial decisions has never been fully appreciated. In the years preceding the bailouts, banks like Citi had been perpetuating a kind of fraud upon the public by pretending to be far healthier than they really were. In some cases, the fraud was outright, as in the case of Lehman Brothers, which was using an arcane accounting trick to book tens of billions of loans as revenues each quarter, making it look like it had more cash than it really did. In other cases, the fraud was more indirect, as in the case of Citi, which in 2007 paid out the third-highest dividend in America – $10.7 billion – despite the fact that it had lost $9.8 billion in the fourth quarter of that year alone. The whole financial sector, in fact, had taken on Ponzi-like characteristics, as many banks were hugely dependent on a continual influx of new money from things like sales of subprime mortgages to cover up massive future liabilities from toxic investments that, sooner or later, were going to come to the surface."

http://www.rollingstone.com/politics/news/secret-and-lies-of-the-bailout-20130104

December 2010: "The big accounting firm Ernst & Young helped Wall Street investment bank Lehman Brothers conceal its deteriorating financial condition before Lehman's historic collapse, New York Attorney General Andrew Cuomo charged Tuesday."

http://www.washingtonpost.com/wp-dyn/content/article/2010/12/21/AR2010122103973.html

December 2010: "Lehman’s accounting maneuver — known as Repo 105 — is a symptom. When a Lehman officer told Lehman senior executives that their regular practice of moving as much as $50 billion off its balance sheet on the last day of each quarter was improper, the Lehman executives instructed Ernst & Young, Lehman’s auditors, to interview him. But, when Ernst met the day after with Lehman’s outside directors, it said nothing about these charges. So much for the auditor as internal watchdog!"

http://www.nytimes.com/roomfordebate/2010/12/20/how-to-make-auditors-more-accountable/window-dressing-and-fraud

May 2010: '“The market’s loss of confidence, even though it was unjustified and irrational, became a self-fulfilling prophecy,” Mr. Cayne’s testimony says. Before they ran into trouble, both Bear Stearns and Lehman Brothers created so-called shadow financial vehicles. In 2001, Bear Stearns publicized a vehicle that it set up for its clients called Liquid Funding. Around the time, Lehman forged a close relationship with a small firm called Hudson Castle, which helped Lehman finance itself.'

http://www.nytimes.com/2010/05/05/business/05repo.html

April 2010: 'A FEW weeks ago, two Republican House members asked Ben Bernanke, the chairman of the Federal Reserve, whether the Fed knew — before Lehman’s bankruptcy examiner revealed it — about the bookkeeping scam at Lehman known as “Repo 105.” This scam allowed Lehman to disguise how much debt it was carrying, right up until it collapsed. Lehman got new loans to pay off old loans, pretended the new loans were “sales,” and through a complicated series of steps made both the old and new loans disappear just in time for its quarterly reports.'

http://www.nytimes.com/2010/04/04/opinion/04koniak.html

July 2008: "The measures are the S.E.C.’s second attempt in less than a week to combat market manipulation, and they will make it harder to short the stocks of 19 financial institutions, including brokerage firms like Lehman Brothers and Morgan Stanley."

http://www.nytimes.com/2008/07/16/business/16short.html

July 2008: "Lehman Brothers, for example, faced rumors last week that two major clients had stopped doing business with the firm. Lehman’s stock dived almost 20 percent before recovering somewhat as both clients denied the rumors."

http://www.nytimes.com/2008/07/14/business/14sec.html

March 2008: "Bear Stearns averted filing for bankruptcy by agreeing to sell itself to J.P. Morgan Chase & Co., which will assume the firm's trading obligations. As a result, clients with brokerage accounts at Bear, which is mainly an institutional firm but oversees some individual assets, will eventually see their accounts and assets transferred to J.P. Morgan. Like Bear, Lehman Brothers, which saw its stock tumble by 19% yesterday amid concerns the investment bank may also face funding problems, caters mostly to wealthier individual investors."

http://online.wsj.com/article/SB120580155855243823.html

January 2008: "Wall Street banks that sold mortgage investments around the world face legal complaints from as far away as Australia and Norway. Lehman Brothers, the Wall Street bank with the biggest mortgage business, is being sued by towns in Australia that say a division of the firm improperly sold them risky mortgage-linked investments. Lehman has denied the charges and has said the unit, formerly known as Grange Securities, acted properly."

http://www.nytimes.com/2008/01/22/business/22legal.html

June 2007: RS: It is everywhere. But I'm optimistic. There are a--holes everywhere, but there are groups that are less tolerant of people being demeaning.... I have a blog post about research4 done by Boris Groysberg of Harvard Business School. He shows that Lehman Brothers and Schroder Wertheim had no a--hole rules. You weren't allowed to act like an a--hole. At Lehman they installed the rule, were successful, then took it away and performance fell.... People would work for Lehman for less money because of the no-a--hole environment. Schroeder Wertheim lost only two ranked analysts over the course of nine years, for a total star turnover rate of about 2%.

http://www.smartmoney.com/theproshop/index.cfm?story=20070607

August 2006: The report says that Credit Suisse First Boston, Lehman Brothers and Bank of America “all knew that the offshore entities” for which they made trades were associated with the Wylys, but ignored rules requiring disclosure of these transactions and helped them hide the true ownership of the assets. Only when Robert M. Morgenthau, the New York District attorney, issued subpoenas in 2004 did Bank of America close the Wyly accounts.

http://www.nytimes.com/2006/08/01/business/01tax.html

Relationships

RoleNameTypeLast Updated
Opponent (past or present) Fieldstone Investment Corporation Organization Jan 22, 2008
Opponent (past or present) Fremont Investment and Loan Organization Jan 22, 2008
Founder/Co-Founder of Owner of (partial or full, past or present) Hudson Castle Group Organization Apr 13, 2010
Director/Trustee/Overseer (past or present) James K. Asselstine Person Mar 25, 2008
Organization Executive (past or present) David W. Crane Esq. Person Mar 24, 2008
Organization Head/Leader (past or present) Richard "Dick" Severin Fuld, Jr., MBA Person Oct 4, 2009
Employee/Freelancer/Contractor (past or present) Prof. Jeffrey E. Garten Person Jun 19, 2010
Organization Executive (past or present) Richard C. Holbrooke Person Nov 21, 2005
Employee/Freelancer/Contractor (past or present) Kyle Miller Person Apr 13, 2010
Organization Head/Leader (past or present) Stephen A. Schwarzman Person Jun 18, 2007
Organization Executive (past or present) Peter J. Taylor Person Oct 1, 2007
Cooperation (past or present) Charles Wyly Person Aug 10, 2006
Cooperation (past or present) Sam Wyly Person Aug 10, 2006

Articles and Resources

38 Articles and Resources. Go to:  [Next 18]

Date Fairness.com Resource Read it at:
Feb 27, 2013 Why It’s Smart to Be Reckless on Wall Street

QUOTE: That asymmetry in pay (money for profits, flat for losses) is the engine behind many of Wall Street’s mistakes. It rewards short-term gains without regard to long-term consequences. The results? The over-reliance on excessive leverage, banks that are loaded with opaque financial products, and trading models that are flawed. Regulation is largely toothless if banks and their employees have the financial incentive to be reckless.

 Scientific American
Jan 04, 2013 Secret and Lies of the Bailout:The federal rescue of Wall Street didn’t fix the economy – it created a permanent bailout state based on a Ponzi-like confidence scheme. And the worst may be yet to come

QUOTE: Not only did [the 2009 banking system bailout--Ed.] prevent another Great Depression, we've been told, but the money has all been paid back, and the government even made a profit. No harm, no foul – right? Wrong. It was all a lie – one of the biggest and most elaborate falsehoods ever sold to the American people. We were told that the taxpayer was stepping in – only temporarily, mind you – to prop up the economy and save the world from financial catastrophe. What we actually ended up doing was the exact opposite: committing American taxpayers to permanent, blind support of an ungovernable, unregulatable, hyperconcentrated new financial system that exacerbates the greed and inequality that caused the crash, and forces Wall Street banks like Goldman Sachs and Citigroup to increase risk rather than reduce it. The result is one of those deals where one wrong decision early on blossoms into a lush nightmare of unintended consequences.

 Rolling Stone
Nov 25, 2011 In Commodities World, Safe and Secure Sometimes Isn’t

QUOTE: regulators suspect that MF Global did not keep its clients’ money separate in its chaotic waning days, using some customers’ money, they believe, to meet its own obligations. And if the firm violated the rule requiring segregated accounts, investors say they are now concerned about the viability of commodities trading as it has been conducted in the United States for more than a century.

 New York Times
May 31, 2011 S.E.C. Case Stands Out Because It Stands Alone

QUOTE: How Mr. Tourre alone came to be the face of mortgage-securities fraud has raised questions among former prosecutors and Congressional officials about how aggressive and thorough the government’s investigations have been into Wall Street’s role in the mortgage crisis.

 New York Times
Mar 08, 2011 Bank Chief Rejects Idea of Reducing Home Loans

QUOTE: Showing resistance for the first time against government pressure to write off tens of billions worth of mortgage debt, Bank of America executives said on Tuesday that the idea was unworkable and warned that it would be unfair to borrowers who had managed to stay current on their loans.

 New York Times
Dec 22, 2010 N.Y. Attorney General Cuomo sues Ernst & Young, alleging Lehman accounting fraud

QUOTE: The big accounting firm Ernst & Young helped Wall Street investment bank Lehman Brothers conceal its deteriorating financial condition before Lehman's historic collapse, New York Attorney General Andrew Cuomo charged...

 Washington Post
Dec 21, 2010 What's Wrong With Accountants? Ernst & Young may soon be sued for its role as auditor of Lehman Brothers. What kind of oversight do accounting firms need?

QUOTE: Many accountants will say that there was no fraud because Lehman’s numbers were accurate on the day they were reported (even if it was understood by both Lehman and its auditor that Lehman would reborrow the same amount the next day). In years past, the S.E.C. would have said that an auditor’s responsibility was to provide a full and fair disclosure, and not simply to certify compliance with generally accepted accounting principles.

 New York Times
Dec 16, 2010 Wall Street Whitewash

QUOTE: The bipartisan Financial Crisis Inquiry Commission was established by law to “examine the causes, domestic and global, of the current financial and economic crisis in the United States.” The hope was that it would be a modern version of the Pecora investigation of the 1930s, which documented Wall Street abuses and helped pave the way for financial reform. Instead, however, the commission has broken down along partisan lines, unable to agree on even the most basic points.

 New York Times
May 04, 2010 Crisis Panel to Probe Window-Dressing at Banks

QUOTE: It’s an open secret on Wall Street that many big banks routinely — and legally — fudge their quarterly books. But now Washington is taking a hard look at a range of maneuvers that help banks dress up their financial statements, and raising some uncomfortable questions about banks’ bookkeeping.

 New York Times
Apr 03, 2010 How Washington Abetted the Bank Job

QUOTE: Mr. Bernanke said the Fed had known nothing about this....The collapse of Enron back in 2001 revealed that the biggest financial institutions, here and abroad, were busy creating products whose sole purpose was to help companies magically transform their debt into capital or revenue.

 New York Times
Feb 17, 2010 Wall Street's Bailout Hustle: Goldman Sachs and other big banks aren't just pocketing the trillions we gave them to rescue the economy - they're re-creating the conditions for another crash

QUOTE: there's still a widespread misunderstanding of how exactly Wall Street "earns" its money, with emphasis on the quotation marks around "earns." The question everyone should be asking, as one bailout recipient after another posts massive profits — Goldman reported $13.4 billion in profits last year, after paying out that $16.2 billion in bonuses and compensation — is this: In an economy as horrible as ours, with every factory town between New York and Los Angeles looking like those hollowed-out ghost ships we see on History Channel documentaries like Shipwrecks of the Great Lakes, where in the hell did Wall Street's eye-popping profits come from, exactly?

 Rolling Stone
Sep 30, 2009 Credit Rating Agency Analysts Covering AIG, Lehman Brothers Never Disciplined

QUOTE: Analysts at the three biggest credit rating agencies who gave positive, investment-grade ratings to AIG and Lehman Brothers up until their collapse have not been fired or disciplined...

 Huffington Post
Sep 16, 2009 Citing Risks, U.S. Seeks New Rules for Niche Banks (Back to Business)

QUOTE: While they [niche banks that give loans to business] have brought billions of dollars in deposits, thousands of jobs and millions in charitable donations to Salt Lake City, the banks have also drawn fire from Washington.

 New York Times
Aug 11, 2009 Firmly hooked: Is it good if bosses feel strongly for the firm? (Business.view)

QUOTE: GETTING bosses to act in the best interests of a company’s shareholders has long been one of capitalism’s trickiest problems...

 Economist
Aug 05, 2009 Despite Bailouts, Business as Usual at Goldman

QUOTE: Goldman [Sachs] executives are dismissive, even defiant, when critics argue that the bank is playing a heads-we-win, tails-you-lose game with American taxpayers. And yet the questions keep coming.

 New York Times
Aug 02, 2009 Computer-trading worries grow as NYSE builds new datacenter

QUOTE: Not everyone is happy that the NYSE is poised to massively boost the already overwhelming amount of computer trading. At issue is not the simple fact of computers trading against one another over electronic networks—it's the speed with which they appear to be squeezing the humans out of the loop, and the potential instability and fragility that may result from increased automation of global markets.

 Ars Technica
May 14, 2009 Inquiry Focuses on Ex-Pension Official for Bush

QUOTE: The former Bush administration official [Charles E. F. Millard] in charge of the federal agency that guarantees pensions for 44 million Americans is under investigation over his contacts with several major Wall Street firms seeking to obtain lucrative contracts.

 New York Times
Dec 21, 2008 Even Bernard Madoff Doesn't Deserve This

QUOTE: when it comes to large-scale frauds involving public companies and their millions of shares, the guidelines' grounding in mathematics sometimes results in sentences that are, quite literally, off the charts. They fall within the realm of prison terms usually reserved for Mafia bosses, major international drug lords, cop killers, child molesters and terrorists.

 Washington Post
Oct 30, 2008 Bonus Backlash Brewing

QUOTE: The very people who brought us the global financial crisis are now getting ready to reward themselves for a job well done. Meanwhile, of course, there's another wrinkle: American taxpayers now have stakes in all these firms, which we got for saving many of them from collapse.

 Forbes
Oct 29, 2008 Most Presidents Ignore the Constitution: The government we have today is something the Founders could never have imagined.

QUOTE: It is clear that the Framers wrote a Constitution as a result of which contracts would be enforced, risk would be real, choices would be free and have consequences, and private property would be sacrosanct. The $700 billion bailout of large banks that Congress recently enacted runs afoul of virtually all these constitutional principles.

 Wall Street Journal, The (WSJ)

38 Articles and Resources. Go to:  [Next 18]