Daily Archives: September 11, 2013

The SEC Flacks Paint Lehman’s Looters as the Victims of a “Political” SEC

By William K. Black

This is the second installment in a three-part series correcting the NYT propaganda that seeks to transmute the SEC’s refusal to hold any of Lehman’s looters accountable for their myriad frauds.  For the purposes of this article I assume that the reporters have accurately represented the SEC officials’ positions.  I discuss the journalists’ analytical flaws.  In my next column I’ll address critical facts excluded by the SEC and the reporters.  Those facts demonstrate that Lehman was an “accounting control fraud.”  The NYT article ends with this morality play about the SEC’s anti-enforcement “team”:

“The S.E.C. team also concluded that Repo 105 would not have been ‘material’ to investors because the firm’s leverage ratio was trending downward regardless of Repo 105.

That conclusion set off a wave of dissent inside the S.E.C. Senior accountants and the head of the S.E.C. unit that oversaw corporate disclosures questioned the findings. Ms. Schapiro urged Mr. Canellos to keep digging.

But Mr. Canellos, a former federal prosecutor who is now the co-head of the S.E.C.’s enforcement unit, did not budge. Despite the political pressure, he told colleagues at one of the meetings, they could not bring a case if the evidence was lacking.

‘Our job is to seek justice,’ he said.”

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Appointment of Summers Would Signal a Weak and Failing US

By Dan Kervick

The Federal Reserve is the central bank of what is still the world’s most important economy, and its Board of Governors is responsible for regulating and stabilizing the financial engine of US capitalism. But to much of the world, that engine now appears to be both poorly designed and overhyped. The global economy has yet to emerge from its most devastating financial failure since the Great Depression. The hub of that radial disaster was Wall Street and the United States, where a combination of botched corporate governance, derelict regulators, open corruption, unhinged greed and sheer, manic stupidity helped run much of the developed world’s economic system into the ground.  The economic model that for a brief period during the last two decades of the 20th century struck many as a shiny modern marvel of economic engineering now exhibits the corroded aspect of a shoddy and dangerous lemon hawked by fly-by-night hustlers to a world of ingenuous chumps. Continue reading