Wednesday, March 17, 2010

Lehmangate Part 2: What Is the Rest of Wall Street Hiding?

THAT is the question that should be investigated at this point.  What other kinds of frauds are being perpetrated by the thieves on Wall Street and which highly placed public officials are enabling that fraud to continue?

Clearly, upon examing all of the evidence and connecting the dotted lines, Lehman committed Enron-esque fraud with its Repo 105 maneuvers and was aided and abetted by its accountant, Ernst & Young and by Federal Reserve officials, at the time, specifically Tim Geithner. At the very least all of the upper executive management team at Lehman, the board of directors at Lehman, all relevant professionals and senior management at E&Y should eventually be under indictment. I would settle for the forced resignation of Geithner, but he should be thoroughly investigated and indicted as well. Don't hold your breath for this, recall that current Attorney General Eric Holder is the guy who wrote the pardon letter for Marc Rich that Bill Clinton signed just before leaving the White House. Holder is no stranger to the enablement of criminal activity and tax evasion.

I'm starting to wonder if gold's unusual relative strength in the face of the aggressive, unmitigated manipulation attempts to get it lower over the past month is a signal that Lehman's fraud is just the tip of the iceberg. Ernst & Young signed off on a balance sheet accounting maneuver that was clearly and unequivocally illegal. Even an accounting 101 student could make that determination. It leads one to wonder "what the hell else is hiding in Wall Street's accounting closet that is being approved by our "trusted" accounting firms and ignored or enabled by the Fed? We know that Goldman is involved in all kinds of non-transparent, at a minimum unethical, and likely fraudulent OTC derivatives activities. They roll out their 10-K every quarter with their accountant's stamp of approval and Lloyd "I'm God" Blankfein smiling and pontificating at how great Goldman is at making profits and managing risk. But what is really going on behind the curtain. And even worse, to what extent are Bernanke, Geithner and even Obama aware of just how fraudulent and corrupt everything is on Wall Street - and the manner of accounting for it?

And now we have Banana Ben begging Congress, and the public, to sign-off on handing even MORE oversight and regulatory responsibilities to the Fed. Just today Bernanke is making the case that "the Fed’s 'wide range of expertise' makes it 'uniquely suited to supervise large, complex financial organizations and to address both safety and soundness risks and risks to the stability of the financial system as a whole'” Bloomberg link.

Set aside the fact that Bernanke never saw the housing bubble, mortgage bubble, toxic asset bubble, banking system collapse - his "uniquely suited" oversight abilities cost the Taxpayers of this country trillions.  Let's examine Bernanke's statement in the context of Lehmangate and Repo 105.

Where was Bernanke's oversight abilities while his team was in Lehman's office for two years with full access to all books and records?  Let me quote again from Andrew Ross Sorkin's statement yesterday:
Almost two years ago to the day, a team of officials from the Securities and Exchange Commission and the Federal Reserve Bank of New York quietly moved into the headquarters of Lehman Brothers. They were provided desks, phones, computers — and access to all of Lehman’s books and records. At any given moment, there were as many as a dozen government officials buzzing around Lehman’s offices (link in the post below).
The Fed WAS in a position of unfettered and direct oversight at Lehman for two years leading up to Lehman's collapse and yet Lehman still pulled off massive fraud - right under your nose, Ben. Either you are a complete moron or you are a psychopathic liar. Which one is it Ben?

Now that Lehman has collapsed under a massive weight of fraud and corruption - and all of surviving Wall Street was allowed to feed greedily, with the help of TARP, off the carcass, the real question is just how much fraud is being currently covered up and papered over? It would seem to me that after Enron, and the ensuing series of massive, ever-larger financial collapses that have occurred (Refco,Bear Stearns, AIG, Fannie Mae, Freddie Mac, GMAC, etc), that our political leaders and those charged with regulations and oversight, including the Fed, would be interested in cleaning up this mess and putting those who created and participated in this mess in jail.

Will this ever happen? Not if the Fed is given greater powers, not if Geithner and Larry Summers remain in the White House and not if the current crooks leading Congress are allowed to remain in power. At the margin, it's up to the public to do something about this. If we allow this to continue, the problems will only grow larger and the U.S. will eventually collapse under the sheer weight of too much debt and fraud.  Otherwise, I hope everyone who understands this is accumulating as much gold and silver as they can.


  1. My vote is Banana Ben as psychopathic liar. Jesse summed it up beautifully in a recent post with this little gem.

    "An entire society built around white punks on dopamine, trapped in the infantile stage of development, allocating resources for the many, the arbiters of utility and worth, from Wall Street to the Congress: this is what America has become."

    Joe M.

  2. He's definitely a liar - and a bad one at that - I'd love to play poker against him.

  3. The U.S. has always been something of a repository for criminality. It's come to a head of late. And now, even the semblance of the rule of law has been mostly stripped away for those who are willing to honestly appraise the situation.

    The question before is what do we do about it? And the following is not meant to be a knock on you, Dave, because, as a fellow blogger, I would simply be implicating myself, but blogging about all of this perfidy isn't changing a damn thing. In fact, in so far as it acts as something of a release valve, it may even be, to some degree, counterproductive.

  4. I have read every piece of conspiracy theory on silver that has been written. All of what has been written has resulted in no discernable movement in the price. I guess if you keep crying wolf eventually something will happen and if it works in your favour , you can claim to be the great prognosticator. Meanwhile, you are like so many others. Full of fury signifying nothing.

  5. Where did these clowns learn reckless, crazy behavior? From the top I imagine:
    Bernanke: No Bank Reserves Needed:
    Last chance at real money folks.

  6. @anonymous: the quote is "full of sound and fury. Signifying nothing..." -Macbeth

  7. Edwardo, I agree completely. Question is, how would you or I go about getting a rebellion organized? I dunno. I'm part of a "Campaign for Liberty" meet-up group here in Denver - it was Ron Paul's grass-roots Presidential Primary campaign movement, and I sent around a group email (over 200 people) a few months ago about getting something organized and all I got back was an email from some turd State representative who said "now we don't need to resort to violence, contact me and work with me to get change going thru the system." I about fell off my chair laughing.

    I will say, that if this group or the local tea party group decides to really get feisty, I will for sure enlist.

  8. Dave, I forgot you were in Denver! I was out there this past weekend for the St. Pattys day parade. It was a fun time with a lot of good drunk people.

    I don't know if there would be anything that would come out of a organized rebellion from Denver. There's just nothing around there except mountains and open land. Now, if something were to get started on the East coast, that would really cause some change. Unfortunately, the east coast is very much supported by the government (industrial military complex), and so nothing major will get rolling in this country until the SHTF.

  9. Annonymouus, MacBeth said this shortly before the Birnam Wood began to march on his castle as prophesied by the witches. An event dismissed by all as impossible and farcical in nature. I don't think you could find a more apt quotation in Shakespeare for that which is going to transpire unless of course you look at the Merchant of Venice.

    She should have died hereafter;
    There would have been a time for such a word.
    To-morrow, and to-morrow, and to-morrow,
    Creeps in this petty pace from day to day
    To the last syllable of recorded time,
    And all our yesterdays have lighted fools
    The way to dusty death. Out, out, brief candle!
    Life's but a walking shadow, a poor player
    That struts and frets his hour upon the stage
    And then is heard no more: it is a tale
    Told by an idiot, full of sound and fury,
    Signifying nothing.

    Enter a Messenger

    Thou comest to use thy tongue; thy story quickly.

    Gracious my lord,
    I should report that which I say I saw,
    But know not how to do it.

    Well, say, sir.

    As I did stand my watch upon the hill,
    I look'd toward Birnam, and anon, methought,
    The wood began to move.

  10. Not to oversimplify matters, but the best stratagem I can come up with is as follows:

    (Try not to wet your drawers laughing)

    Obtain a permit from the local authority to deliver a public address. However, before doing so, locate at least one, but preferably several individuals who will essentially act as ringers to respond to your public jeremiad constructively. The diatribe should be carefully composed beforehand and last for no more than thirty to forty minutes.

    Repeat your well constructed jeremiad/diatribe/harangue several times in the course of one morning or afternoon once or twice a week for at least a month straight. In order to gain adherents, make concrete predictions about the outcome of future events. In essence you must lay your vision of what reality consists of on the line.

    If you are correct in prognosticating YOU WILL GAIN CREDIBILITY! Be prepared for this entire process to take quite a bit of time. There is much more to say, but I'll save it for a later date.

  11. Edwardo - not laughable. I've imagined doing something like that. I don't think the masses are pissed enough or hurting enough to listen. This summer could get interesting though...

  12. Anonymous Shakespeare - that you, Mike? Now I'm going to have re-read "The Merchant of Venice" LOL.

  13. Ryan: glad you enjoyed Denver! I hope you got up the hills to ski - the snow is excellent right now. Agree on Denver call: the people here are largely pacifist liberal types who naively believe that somehow the system wiil be turned around by Obama. People out here would rather hope for the best and worry about weather or not there's fresh powder in the mountains in the winter or fears of any possible shortage of road bike parts in the summer...

  14. Dave,

    You got your answer yesterday as Wachovia pays a pittance and all executives avoid prosecution.

    Planet Wall Street operates in a completely different realm from the bottom 99%.

    The only systemic reform we will be getting is total, utter collapse under the weight of absolute corruption.

    Joe M.

  15. Well, we agree again, Dave. The masses aren't even remotely in revolutionary mode, and odds are they may never be.

    If and when one goes out into the street with one's rifle-fully permitted of course- because one is fed up with the way things are being run, and one finds oneself alone, one discovers that the revolution isn't on.

  16. Dave, my sister works at E&Y. She said they've gotten emails and phone calls assuring the employees that they are okay and did everything correctly... but she said she doesn't think it looks good. All the partners at E&Y are either in panic or in total denial. They have a company-wide webcast today about lehmangate, so we'll see how this whole thing unfolds.

  17. Hey Ryan: I hope everything works out for your sister, but she should get her resume put together and circulated ahead of the pack. At a minimum, everyone on the Lehman deal is in big, big trouble. I remember Arthur Anderson came out after the truth about Enron was revealed and said they did nothing wrong. That's standard operating procedure.

    It may take awhile, but there will be enough politicians looking for blood and E&Y has major artery hemmoraging right now. And they should be investigated thoroughly because, in my experience in observing these things, if E&Y was signing off on fraud at LEH, it means every team in their financial services division was signing off on fraud.