I’d missed yesterday’s Times piece on Lehman, but it’s worth mentioning that US corporate lawyers come off looking pretty good:
Here, the investment bank used repos to temporarily park assets off its books to make its end-of-quarter debt levels look better than they did — while calling them sales instead of loans.
The accounting tactic, first used by Lehman in 2001, had one catch, according to Mr. Valukas: no American law firm would sign off on its use.
Of course, after Lehman found some British lawyers who would sign off on this fraud, their accounting firm, Ernst & Young, dutifully fell into line.
Remember Enron, brought to you in part by Arthur Andersen? Maybe if Ernst & Young is destroyed by this, as Andersen was, auditors will raise their ethical standards to the lofty heights of corporate lawyers, or at least Catholic Popes.
And let’s not forget that the 2002 response to Enron, Sarbanes-Oxley, created an “overly complex regulatory environment” for financial services firms like Lehman.