Senator Christopher Dodd, chairman of the Banking Committee, called on the Justice Department on March 19 to investigate the collapse of Lehman Brothers. Dodd was focusing on broad accounting manipulations by Lehman that would have hid the grave trouble it was falling into.
In a letter to Attorney General Eric Holder, Dodd cited the 2,200-page report released March 11 by the U.S.-appointed Examiner Anton R. Valukas, which said that Lehman “did not disclose its use–or the significant magnitude of its use–of Repo 105 to the Government, to the rating agencies, to its investors, or to its own Board of Directors.” The exhaustive report by Valukas took a year to compile.
Dodd stated in his letter that Lehman’s use of Repo 105, an aggressive accounting practice, helped “conceal its holdings of bad assets and to temporarily remove approximately $50 billion of assets from its balance sheet at the end of the first and second quarters of 2008.”
To read the full text of Dodd’s letter, please click here.
To read about the first anniversary of Lehman’s crash from the archives of InvestmentAdvisor.com, please click here.