VALUKAS INQUIRY REVEALS CROOKERY ON A GRAND SCALE

The Slog’s mother-site accused JPM early last year of having withheld weekend monies from Lehman Brothers. The US bankruptcy inquiry agrees.

In that fateful Tuesday afternoon, a Notbornyesterday source told me:

“It’s incredible. Morgan just didn’t return our calls after 4pm Friday. With that money there would’ve been no need to throw in the towel”.

The source – and two very close friends of The Slogger – lost their jobs as a result of that. But now the man in charge of sniffing the various scents of fraud Anton Valukas says the inquiry interviewed more than 100 people and scrutinised more than 10 million documents, plus 20 million pages of emails from Lehman. From this, he concludes that:

1. JPM ‘most likely’ withheld Lehman funds improperly; and that
2. Lehman took its posthumous revenge in that a “limited amount of assets” belonging to Lehman were “improperly transferred to Barcap” the Barclays arm which scooped up the remaining good bits left after the bank’s demise.

Valukas added:

“By changing guarantee agreements and making new demands for collateral, JP Morgan and Citigroup helped to precipitate the liquidity crisis that doomed Lehman. The demands for collateral by Lehman’s lenders had direct impact on Lehman’s liquidity pool, and Lehman’s available liquidity is central to the question of why Lehman failed.”

This is polite-speak for the truth: after its rapacious and cynical demands were rebuffed by a desperate Lehman, the pirates at JP Morgan simply hung on to the Lehman liquidity it held.

And in a further development, there are what the Americans call “colorable claims” against Lehman CEO Richard Fuld, based on what basically amounts to hiding the nature of Lehman’s finances. Fuld, it is alleged, recorded a loan against assets that got those assets off the books by recording the deal as a sale, not a financing. (Nothing wrong with that: Gordon Brown did it all the time as Chancellor.)

FOOTNOTE: This is the banking system that only needs a bit of tinkering here and there to be tickerty-boo.