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Weekly Wrap: Lehman report fallout
A Wall Street sign in New York City's financial district.
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Oh, and Alison, this nice piece from Alphaville has some answers for you: http://ftalphaville.ft.com/blog/2010/03/17/177541/lehman-alone-in-its-fe... If my clarification didn't make amends, I hope that does. :)
No, no, dear listeners, I was misunderstood!
I am very much FOR knowing this information. In fact, I was pointing out that in the case of many banks, we DO currently know that they are overvaluing their assets, and yet the government and investors are ignoring that information.
The point I was getting at, and which did not come across so well in the rapid-fire discussion, is that if we *paid attention* to this, no one would invest in banks. Right now. Not in the future, but right now, knowing what we know.
When it comes to Repo 105 and similar structures, bank regulators and so on would probably NOT allow this information to be public -- just as they did not release details of the stress tests last April - because it would undermine confidence in banks - and thus it would accomplish nothing for their goals of stabilizing the banks.
I hope that helps! As a financial journalist I am certainly all for knowing as much as we can. Knowing information and ACTING on it, however, are two very different things as we have seen during this crisis.
It's also rare that regulators devote as many resources to daily and monthly regulation as they do to an examiner's report like this one.
You're not the only one!
Perhaps she can make amends by solving this riddle for me. In the New York Fed's version of this "warehousing" Lehman's non-performing loans off-book for companies, was the 3rd party auditor Moody's? Did the Fed take the rated or unrated portions of the Freedom CLO? Or both?
Thanks in advance, etc
I was dumbfounded by Ms. Moore's know-nothing comment that it was better to just not know about similar shady accounting tactics that are undoubtedly being used by other financial institutions because it would just destroy confidence in the banking industry again. I was equally dumbfounded that Mr. Ryssdal allowed the statement to pass without comment.
