JPMorgan, Citigroup helped trigger Lehman collapse, report argues

The implosion of Lehman Brothers was in part triggered by excessive capital demands from JP Morgan Chase and Citigroup, and in part by the manipulation of its balance sheet by leading directors, a wide-ranging official report
into the investment bank's collapse has found.


Dick Fuld, the former chief executive of Lehman, is criticised in the report which has taken a year to compile.

http://www.telegraph.co.uk/finance/financetopics/financialcrisis/74...


In what is likely to kick-start a series of costly and long-running court cases, the exhaustive investigation found that the two Wall Street banks demanded significant amounts of capital and extra guarantees in the run-up
to Lehman's
downfall
– with JP Morgan Chase requesting $5bn (£3.3bn) just three
days before Lehman's bankruptcy filing.

At the same time, Lehman directors, including chairman Dick Fuld and former finance director Erin Callan, failed to disclose key practices, and
certified misleading statements. The
astonishing claims are made in a 2,200-page, nine-volume report

written by court-appointed examiner Anton
Valukas
, which Judge James Peck admitted read "like a best
seller".



The explosive report also calls into question:

• The use of accounting tactics designed to move $50bn from Lehman's balance sheet.

• The work of auditor Ernst & Young.

• Barclays' subsequent purchase of Lehman's US assets.

Among Mr Valukas's findings – which are designed to help the court and the bank's trustees establish where there may be legal grounds for future claims
– he asserts that the evidence "may support the existence of a .
. .[valid] claim that JP Morgan breached the implied covenant of good faith
and fair dealing by making excessive collateral requests" to Lehman.

"The demands for collateral by Lehman's lenders had direct impact on Lehman's liquidity pool," he says.

Turning to the role of the bank's directors, Mr Valukas argues that none of the board breached their fiduciary duties in the run-up to Lehman's
downfall. He found that while the directors should have exercised greater
caution in decisions taken, they did not cross the line into "gross
negligence".

However, he does touch significantly on the role of what is known as "Repo 105" – essentially a set of accounting techniques which, all
told, removed approximately $50bn of assets from the bank's balance sheet
for the two quarters before it collapsed.

"Lehman never publicly disclosed its use of Repo 105," the report reads, even though Martin Kelly, the bank's chief financial controller,
raised the issue with Ms Callan and her successor Ian Lowitt.

The report also moves forward the long-running legal battle between Barclays – which bought the bulk of Lehman's US brokerage assets days after it
collapsed – and Lehman's trustees. Mr Valukas found that a "limited
amount of assets" belonging to Lehman were "improperly transferred
to Barclays". His comments provide extra weight behind Lehman's
trustees' existing claim that Barclays received an $8bn "windfall"
when it bought the assets, a trial over which is due to begin on April 26.

In addition, the report finds that there is enough evidence for a possible claim against Ernst & Young, Lehman's auditor. The report, which was
lodged with the court in February, was made public yesterday after Judge
Peck agreed to it being unsealed.

Spokesmen for JP Morgan Chase, Barclays and Ernst & Young declined to comment or had not commented at the time of going to press. Citigroup said
in an e-mailed statement that the bank is reviewing the report, and that a
preliminary analysis shows the examiner “has not identified any wrongdoing
on Citi’s part.”



Views: 12

Reply to This

"Destroying the New World Order"

TOP CONTENT THIS WEEK

THANK YOU FOR SUPPORTING THE SITE!

mobile page

12160.info/m

12160 Administrators

 

Latest Activity

Doc Vega posted blog posts
27 minutes ago
Doc Vega posted a blog post

Through Her Disguise

I know that a lot of times in my articles it might seem that I'm down on women a lot from a man's…See More
yesterday
Burbia posted a video

Soros Will Never Recover..Elon AIR The whole Thing

The view on TRUMP protests as people are Democrats..CLOWN SHOW: Cory “Spartacus” Booker went on The View to take a victory lap for joining the Soros-funded a...
yesterday
Burbia replied to cheeki kea's discussion Tartaria
"If this was a universal language, it might be regarded as a time going back before the Tower of…"
yesterday
Burbia commented on Sandy's photo
Thumbnail

FB_IMG_1744012893167

"I was waiting for a trail of death to meet between Vancouver Canada and San Francisco California…"
yesterday
Twin City Security Fort Worth updated their profile
Monday
Doc Vega posted blog posts
Monday
Sandy posted a photo
Monday
cheeki kea replied to cheeki kea's discussion Tartaria
" I think first evidence of the lost empires Language (tartarian) needs to be discovered or at…"
Sunday
cheeki kea posted a discussion
Sunday
Doc Vega's 6 blog posts were featured
Sunday
tjdavis posted a photo
Sunday
tjdavis posted a blog post
Sunday
tjdavis posted a video

Riefenstahl - Official Trailer

A captivating insight into the private estate of Leni Riefenstahl, who became world-famous with her Nazi propaganda film "Triumph of the Will" but kept denyi...
Sunday
Doc Vega posted a blog post

Price of Becoming Wise

The answers you seek are not hereLet me make that perfectly clearNow that she is no longer…See More
Saturday
Doc Vega commented on Doc Vega's blog post One of Many Witnesses to the JFK Assassination Not Listed in the Warren Report
"tjdavis Thanks for your support! "
Friday
Doc Vega posted blog posts
Friday
tjdavis favorited Doc Vega's blog post One of Many Witnesses to the JFK Assassination Not Listed in the Warren Report
Friday
Burbia commented on KLC's group MUSICWARS
Apr 2
Doc Vega posted a blog post

The Unnerving Frequency of Disappearances on the Appalachian Trail Pt. 1

There’s another one of the cluster zones of missing persons reports that fails to render the…See More
Apr 2

© 2025   Created by truth.   Powered by

Badges  |  Report an Issue  |  Terms of Service

content and site copyright 12160.info 2007-2019 - all rights reserved. unless otherwise noted