MORE ON CORRUPTION

There is something I had meant to mention in my last post plus some new information which I thought I should add. First, the old. It was the collapse of Lehman Brothers that was the immediate cause of our current economic crisis. Something that has come out relatively recently is that Lehman Bros. had engaged in what is called a Repo 105 maneuver (I hadn't heard of it before either). What that means is that they underwent an audit by one of the big accounting firms and prior to that audit they sold $50 billion in bad assets to another company and then repurchased them after the audit. In short, they made a paper or phony sale in order to hide their weakness. A former Lehman V.P. has testified that in May, 2008 he sent a letter to top executives warning them of concerns he had about their accounting practices and he was fired immediately thereafter. The company went under September 15, 2008. Think this doesn't affect you? A California representative has said that 40 municipalities across the nation lost $1.7 billion in total with the collapse of Lehman. All this is found in the LA Times, 4/21/10.

In today's LA Times is the report that the former CEO of KB Homes, one of the west's largest homebuilders, was just found guilty of four felonies related to backdating stock options. According to LA Times business columnist Tom Petruno, illegal backdating has been found at hundreds of companies (and who knows how many instances haven't been found).

Although I haven't read the books yet, I have seen the authors interviewed and I would recommend books by Michael Lewis (the title escapes me, but it is #1 on non-fiction best seller lists) and 13 Bankers by Simon Johnson and another fellow, I think his name is Kwak. They had an extensive interview on Bill Moyers Journal on PBS that was aired April 16, 2010 and I would recommend it for anyone who is interested. Also, although it is older and covers corporate misdeeds prior to the 2008 meltdown, a good read is Pigs At the Trough by Arianna Huffington.