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What Lehman Did


The long-awaited autopsy on Lehman Bros.

. Big news: The bank hid liabilities off its balance sheet!

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Everyone is shocked,

shocked

. The amazing thing is the mundanity of Lehman's methods: Repos. This was inside-the-box thinking even 10 years ago, when the bank apparently started using them. As the

New York Times

explains:

Well. Why would anyone bother with these kinds of transactions

except

at the end of the quarter?

The operative term here is "standard practice," and it's not just on Wall Street. Versions of this are also done by school systems and city and state governments: The quarterly (or annual fiscal year) cutoff date presents an opportunity to manipulate the figures to most flattering effect. As is often said, any financial statement is a snapshot; these accounting gimmicks simply crop the frame in in more or less creative ways.

It's only deemed dishonest if disaster strikes—as with Lehman. Anyone who complains

before

disaster strikes is considered weird; if they persist, they become

. If not unemployable.

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