Surprise, Wall Street Banks STILL Masking Debt Levels At The End Of Each Quarter

Jamie Dimon

Photo: ap

You know what the whole Lehman Repo 105 thing is about right?The bank used an accounting trick at the very end of each quarter to make it appear far less leveraged than it actually was. Well, they weren’t alone, and not only that, the practice, in some form or another, is still going on.

Kate Kelly, Tom McGinty, and Dan Fitzpatrick at WSJ have the report, which at first read looks very bad:

A group of 18 banks—which includes Goldman Sachs Group Inc., Morgan Stanley, J.P. Morgan Chase & Co., Bank of America Corp. and Citigroup Inc.—understated the debt levels used to fund securities trades by lowering them an average of 42% at the end of each of the past five quarterly periods, the data show. The banks, which publicly release debt data each quarter, then boosted the debt levels in the middle of successive quarters.

Specifically, this is going on in the repo market.

The practice of reducing quarter-end repo borrowings has occurred periodically for years, according to the data, which go back to 2001, but never as consistently as in 2009.

Enter in the comments which politician is going to be the first to call for fresh hearings today.

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