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The "Repo 105" Scam: How Lehman Fooled Everyone (Including Allegedly Dick Fuld) And How Other Banks Are Likely Doing This Right Now

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March 11, 2010 – Comments (11)

The "Repo 105" Scam: How Lehman Fooled Everyone (Including Allegedly Dick Fuld) And How Other Banks Are Likely Doing This Right Now
Zero Hedge - Submitted by Tyler Durden on 03/11/2010

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#1) On March 12, 2010 at 1:36 AM, amassafortune (29.56) wrote:

Now we know where the Fed got their idea for tri-party reverse repos where the repo dealer is exempt from claiming the inventory on their balance sheets.The proposal is basically repo 105 only with SEC and FASB rule changes to avoid charges of impropriety.

And remember, always add liquidity at the top and drain from the bottom - just like an oil change only you're lubricating the economy.

 

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#2) On March 12, 2010 at 2:20 AM, binve (< 20) wrote:

Hey amass!

Now we know where the Fed got their idea for tri-party reverse repos where the repo dealer is exempt from claiming the inventory on their balance sheets.

Exactly!! Man what a sham. Lets make a sale not a sale. Wait that's illegal? Hey we're the government, lets just make it legal. yyeeeaaahhhh!!!!

You know what, I won't be surprised if the don't make the ruling retroactive to prevent the firms from prosecution for financial impropriety.

Yet the game is rigged, so finanicals continue to rally.

But what *kills* me is that these blowhard financial bulls who are "fundamentally engaged" (like valuations for financials have any meaning anymore) don't realize that the whole system is not based on rules or regulations, or hell even funny money. It is not based 100% on confidence. And the whole CDS backstopping issue, Money market issue, the FASB issue, etc. all the ones that you and I have discussed in the past all are setting up and epic confidence fail in the future. IMO, this is a fairly obvious conclusion.

And remember, always add liquidity at the top and drain from the bottom - just like an oil change only you're lubricating the economy.

LOL! nice:) except there engine is running at 10,000 rpm and there is no plug in the oil pan. What happens if the supply from the top is interrupted even for a second? .... yep, I thought so too. :)

Thanks man!.

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#3) On March 12, 2010 at 3:44 PM, outoffocus (23.24) wrote:

Hey Binve, I'm surprised you aren't "yellen" about the new Fed nominee.  Actually I haven't seen much coverage at all in today's CAPs blogosphere.  Why is that?

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#4) On March 12, 2010 at 4:08 PM, binve (< 20) wrote:

Hey outoffocus, LOL!  Actually I don't know a whole lot about her, other than she seems like more of the same "keep interest rates low, yes we are in recovery, deficits don't matter, blah, blah blah".

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#5) On March 12, 2010 at 4:14 PM, outoffocus (23.24) wrote:

Well I'll attach a blurb about her that I recieved from today's Daily Pfennig.  Either way it seems like she's good for governments, banks, and precious metal investors,  bad for consumers.

The big news driving the dollar lower was the 'leaking' of Obama's pick for Vice-Chairmanship of the Federal Reserve. He apparently has chosen Janet Yellen, the Fed Bank of San Francisco President. Yellen has recently been sounding rather dovish on interest rates, and therefore her nomination has all of those who were expecting an early rise in US interest rates heading for the exits. At EverBank, we have never bought into this 'US interest rates are going higher in early 2010' camp. Yellen has pretty strong credentials, as she served as President Bill Clinton's chief economist in the 1990's; and will certainly be approved by the Senate.

So what will her appointment to the Vice Chairmanship mean for the Fed policy? The Vice Chairman doesn't get an extra vote, and their vote is still just one of several. The big difference is that the Vice Chairman gets a permanent vote on monetary policy, while the other Fed heads only get a vote one year out of every three as a regional Fed chief. Therefore, the Vice Chairman has three times more influence on Fed policy and the direction of interest rates.

And Yellen wants to keep interest rates low in order to continue stimulating our economy. Last month she said the US economy "still needs the support of extraordinarily low" interest rates. She is a strong supporter of Bernanke, and has been a key advocate of the massive expansion of the central bank's balance sheet, even as some other regional Fed officials have been calling for a pull back of the monetary stimulus. Yellen spent much of her career at the University of California at Berkeley, and is considered a leading expert in the causes and implications of unemployment. This background has shaped her opinions on monetary policy, which she believes should be used to promote 'full employment' rather than 'price stability'.

Obama will also get to appoint two other governors, giving him the ability to reshape the Fed's seven member Board of Governors. I am a bit biased, but it worries me a bit when those directing our monetary policy are mainly from NY and California. The data shows that these are the exact areas of the country which are in some of the worst financial shape! Doesn't it scare anyone else that these individuals were in leadership positions and directed policy in states which are now basically bankrupt? How about choosing some individuals who are from states that aren't in dire financial straights? I know it is becoming increasingly more difficult to find any US state in good shape, but why do we continually pick folks from the places where the economic downturn has been the worst?

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#6) On March 12, 2010 at 4:25 PM, whereaminow (< 20) wrote:

Wait outoffocus, this article nearly implies that the Fed does not act "independently" from government.  Why, that's not what all the FRNbugs on CAPS tell me.  Do you mean to tell me that the government and the bankster gangsters are actually working hand in hand to fleece the American people!?

Fed apologists should be aghast!  Aghast, I say!

David in Qatar 

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#7) On March 12, 2010 at 4:43 PM, binve (< 20) wrote:

David,

article nearly implies that the Fed does not act "independently" from government.  Why, that's not what all the FRNbugs on CAPS tell me.  Do you mean to tell me that the government and the bankster gangsters are actually working hand in hand to fleece the American people!?

LOL!. That is awesome! Adam Brochert: http://goldversuspaper.blogspot.com/ coined the term Paperbugs awhile ago, but I think I like FRNbugs even better :) 

Thanks man!

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#8) On March 12, 2010 at 4:44 PM, binve (< 20) wrote:

outoffocus,

Thanks! Yep, that pretty much sums up everything I have heard about her ... more of the same :(

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#9) On March 12, 2010 at 4:57 PM, whereaminow (< 20) wrote:

binve,

Ya gotta love the comments on that post over at zerohedge. 

by nope-1004
on Thu, 03/11/2010 - 19:51
#262587

That shifty little wimp Geithner lies more than anyone I've ever seen.

He needs to go to jail.

by johngaltfla
on Thu, 03/11/2010 - 22:33
#262780

F'ing dwarf [Geithner] needs to be in Attica with 5 large homosexually deprived boyfriends nicknamed the "Mules". He's a lying POS and never held a real job in his entire freaking life. 

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#10) On March 12, 2010 at 8:39 PM, whereaminow (< 20) wrote:

LOL, and here is Brad DeLong's response to the new hiring:

Sarah Bloom Raskin for the Federal Reserve

Word is that she's very smart and very energetic and has sound values...

ROFL @ Keynesian fools

David in Qatar

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#11) On March 13, 2010 at 12:05 PM, binve (< 20) wrote:

whereaminow,

@ #9 Yeah man, the Zero Hedge commenters certainly do have a way with language :) It is almost always a good read :)

@ #10 I hear you man. If they keep pushing for more of the same, then that is what they will get. And no that is not a good thing. "Spend our way out of recession" ... (binv shakes his head sadly).

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