Lehman wasn' alone...

How did I know it was RS?

RS - you really need to do some analysis, or SOMETHING other than just cut and paste articles that you don't seem to understand. That said, thanks: at least you've reduced the lengths of your posts!

So, on point: where's the news in this? Don't you know that every company does that, regardless of the industry they're in? Run down inventories, book entries overseas and off-balance sheet? Don't you know that oil companies have vast undeclared reserves, places where they know oil exists but don't tell anyone, because they pay tax on their declared reserves? Book loss-making operations in off-balance sheet LLC's (Enron was famous for that one). Accounting is not a science; it's a set of rules that allow for significant estimates by management.

It's easier to some degree in financial institutions, but it's also quite common for banks to operate principally on borrowed funds. If you look at bank balance sheets in the 90's, for instance, you'll see that Citibank was a net BORROWER of funds, which is to say its assets (loans and leases) exceeded its liabilities (deposits) by a significant amount. Bank of America, on the other hand, with a much broader retail banking base, was a net LENDER of funds: its liabilities (deposits) exceeded its assets (loans and leases). The effect was it was essentially lending money to other institutions (like Citibank) or parking it with the federal government, rather than lending it out itself.

You really need to learn about things before you post about them. You're as bad as Andrew Ross Sorkin of the Times. In fact, you might actually be Andrew Ross Sorkin, given the level of understanding of business you display.

I think this actually is worthy of noting. just becuase evryone is understating leverage ratios doesnt make it ok. In the event of another "shock" to the system, banks will not be as stable as we are expecting.

Citi was also bailed out in the 90's as well.

The news is that the banks are lying. They are using public documents that investors rely on and misleading them. If I an a creditor or a stock holder I am relying on the annual and quarterly reports to inform me on the health of the institution. I think this is criminal.

And to think this clown is advising the obama administration and helped pick his economic team.

http://online.wsj.com/article/SB122826632081174473.html

On October 18, 1999, Citigroup announced that former Treasury Secretary Robert E. Rubin was joining the firm. But what exactly would Mr. Rubin do at Citigroup? Citi's SEC filing eight days later noted that Mr. Rubin would be joining the bank's board of directors. After that, the message to investors began to get murky. Citi said that Mr. Rubin "will serve as Chairman of the Executive Committee of the Board and will work with Mr. [John] Reed and Mr. [Sanford] Weill, Chairmen and Co-Chief Executive Officers, in a newly constituted three-person office of the Chairman."

As a great man of finance, Mr. Rubin would be paid CEO money -- a total of $115 million since 1999, not including stock options -- but without having to run a business or be accountable for the results. For years, journalists tried to figure out exactly what Mr. Rubin's job was at Citigroup, and perhaps even his fellow Citi directors weren't entirely sure. In 2000, a bitter feud between Messrs. Reed and Weill forced the board to choose sides and decide on one CEO to run the business. Before the board began its deliberations, directors reportedly asked Messrs. Reed and Weill -- and also Mr. Rubin -- to leave the room.

This would be customary if the board saw Mr. Rubin as a part of the management team. In fact, at a separate moment in its discussions, the board asked Mr. Rubin if he would like to lead the management team as CEO. He immediately rejected the idea. No surprise there. If you can have the paycheck and the authority without the responsibility, could there be a better gig?

The virtue of this arrangement for Mr. Rubin has become manifest during the current panic. While Mr. Rubin has acknowledged that he promoted the disastrous idea of exposing the bank to greater risk to boost profitability, his "no line responsibilities" job description now allows him to blame the line managers for the consequences of his ideas.

Citigroup shareholders have suffered losses of more than 70% since Mr. Rubin joined the firm. To this day, he appears unable to say what exactly he did for the $115 million that he took out of Citi. "I think I've been a very constructive part of the Citigroup environment," he recently told the Journal, in defense of his tenure. Try selling that line at your next annual performance review, especially when asking for an eight-figure salary.

"The news is that the banks are lying."

First, that's not news. All companies lie. Second, a balance sheet is a SNAPSHOT of the financial position AT A CERTAIN DATE. It does not speak to the day before or the day after, just that date.

That's why the balance sheet is just one part of the financial statements, and why all of the statements must be read together as a whole. To rely on the balance sheet as an indicator of financial strength or weakness is akin to relying on a bank statement as an indication of financial health: it doesn't take into account income or expenses, or flows of funds.

And statements like this are just worthless: "Citigroup shareholders have suffered losses of more than 70% since Mr. Rubin joined the firm."

I'm no fan of Rubin's, but pick your start date and end date and you can get just about any result you want. He's certainly no worse than Hank Paulson or the clowns who ran the last administration.

Harvey Pitt? I used to babysit for his kids in the 70's, and delivered his newspaper. He didn't tip. How he got to the SEC is beyond me.

First, that's not news. All companies lie. Second, a balance sheet is a SNAPSHOT of the financial position AT A CERTAIN DATE. It does not speak to the day before or the day after, just that date.

This is plain stupid. The banks are lent money based on these values. Saying leverage might flucuate intra-period is understood, but the implication is that the banks aren't fudging the books. This is criminal.

to be criminal, it would have to be against the law. it isn't. grow up.

Riversider, you are a stupid liar. The story you posted says that

1) The illegal repo 105 was something just Lehman did, not the others. Only Lehamn called repos sales.
2) the banks in question disclose that the balance sheet flucuates during the quarter
3) clearly, the data is public enough that it can appear in a newspaper story.

Anxious to maintain favorable credit ratings, Lehman engaged in an accounting device known within the firm as "Repo 105" to essentially park about $50 billion of assets away from Lehman's balance sheet, according to the examiner. The move helped Lehman look like it had less debt on its books, the examiner said.

Other Wall Street firms, including Goldman and Morgan Stanley, have denied characterizing their short-term borrowings as sales, the way Lehman did in employing Repo 105. Both of those firms also make standard disclaimers about debt.

For instance, Goldman disclosed in its 2009 annual report that although its balance sheet can "fluctuate," asset levels at the ends of quarters are "typically not materially different" from their levels in the midst of the quarter. Total assets at the end of 2009 were 7% lower than average assets during the year, the report states.

Some banks make big trades that don't show up in quarter-end balance sheets. That is what happened recently at Bank of America involving a trade designed to mature before the end of 2009's first quarter, people familiar with the matter say.

Two Bank of America traders bought $40 billion of mortgage-backed securities from clients for one month, while at the same time agreeing to sell the securities back before quarter's end, according to people familiar with the matter. This "roll" trade provided the clients with cash and the bank with fees.

riversider a liar? really?

Obama is following the economic advice of the guy who helped blow up Citibank. Great...
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The reigning economic approach in Democratic circles for
most of the past two decades has been Rubinomics, a term coined
to describe a set of priorities fashioned in the 1990s by then-
President Bill Clinton’s Treasury Secretary, Robert E. Rubin,
the former co-chairman of Goldman Sachs Group Inc. in New York.

Three-Legged Stool

Rubinomics was a three-legged stool consisting of
restrained government spending, lower budget deficits and open
trade, designed to reassure financial markets, keep capital
flowing and put the country on a path to prosperity.

changing the subject?

“A lot of people on the left were urging them to
nationalize banks,” Baily said. “Instead they injected
capital, and now they’re pulling capital out. That looks more
like Rubinomics than a set of socialist or left-wing economic
policies.”
The Obama economic team looks a lot like Rubin’s, too.
Three of its most prominent members -- Treasury Secretary
Timothy Geithner, National Economic Council Chairman Lawrence
Summers and White House budget director Peter Orszag -- are
Rubin protégés.

Rosner calls out Rubin
http://www.youtube.com/watch?v=Lc7pGllH2ec