Current Events12

Current Events12 - financial institutions were not just...

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Current Events: How Washing Abetted the Bank Job The article that I read today is about the Lehman scam knows as “Repo 105”. In this scam, financial institutions were getting new loans to pay off old loans and pretended the new loans were sales. Through complicated steps made the loans disappear before its quarterly reports. The Federal Reserve never knew about this scam because they were not Lehman’s regulator. The Security and Exchange commission was. The S.E.C. said that they were understaffed and ill-suited to run a voluntary oversight program. The collapse of Enron revealed that the biggest financial institutions were creating products whose sole purpose was to help companies transform their debt into capital or revenue. These big
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Unformatted text preview: financial institutions were not just making a way for banks to hide their debts but also companies. Goldman Sachs and J.P. Morgan helped Greece hide its debt. The bank regulators were not uniformed of this scam going on. In 2006, the agencies published something called the interagency Statement of sound practices concerning elevated risk complex structured Activities. Because of these practices, Banks that seemed to be doing well one day were failing the next. The bank regulators helped worsen the financial crisis while everyone believed that the bank regulators were unable to find out about these scams. http://www.nytimes.com/2010/04/04/opinion/04koniak.html?pagewanted=1...
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