«
»

Gaming Quarterly Bank Repos

Email this post Print this post
By Barry Ritholtz - May 27th, 2010, 7:25AM

The WSJ notes that several of the biggest banks (Bank of America, Deutsche Bank and Citigroup) are lowering their net borrowings in the “repo” market by 41% at the ends of each quarter tomake their balance sheet look better for Q reports.

Highlighted blue bars of top graphic indicate the end of each quarter.

>

click for interactive graphic

All data via the Federal Reserve

>

Source:
BofA, Citi Made ‘Repos’ Errors
MICHAEL RAPOPORT
WSJ, MAY 27, 2010
http://online.wsj.com/article/SB10001424052748704032704575268902274399416.html

PERMALINK
Category: Credit, Legal.

Comments

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data, ability to repeat discredited memes, and lack of respect for scientific knowledge. Also, be sure to create straw men and argue against things I have neither said nor even implied. Any irrelevancies you can mention will also be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

11 Responses to “Gaming Quarterly Bank Repos”

  1. natashastewart Says:
    May 27th, 2010 at 7:44 am

    Wow, sometimes even when we know what is going on we don’t get to notice it until we look at the information in this way, with charts and colors, organized and so on. And I consider it very important for people to remind themselves of this kind of information, not because it might be of everyone’s interest but because it eventually afects the economy of the country and hence it affects us all.
    Thanks for sharing this worth reading content.

  2. b_thunder Says:
    May 27th, 2010 at 9:01 am

    and now Geithner going to teach the Europeans how his “stress test’ fixed the industry…. don’t need no stinkin’ stress test, just some creative, Madoff-style accounting will do… until the new bubble collapses in an even bigger bust!

  3. Robespierre Says:
    May 27th, 2010 at 9:07 am

    ZH talked about this several months ago not that the SEC (or the WSJ) ever cared…

    ~~~

    BR: Your time line is iincorrect

    The issue first came up when it was revealed that LEHMAN was scamming everyone due to their quarterly repos.

    Subsequent studies by some profs (was it Wharton or Stanford? Id ont recall) detected that many banks engaged in this sort of fraud.

  4. inessence Says:
    May 27th, 2010 at 9:33 am

    FASB getting a reality check?? Uncle Warren will probably put a stop to this…
    http://online.wsj.com/article/SB10001424052748704032704575268962900687370.html?mod=WSJ_hps_LEFTWhatsNews

  5. philipat Says:
    May 27th, 2010 at 9:44 am

    Gaming the system may be one thing. Which could esily addressed by Regulators and Congress, if they weren’t all corrupt, by establishing standards based on AVERAGES not month end data.

    In the case of the LEH 106 game, I’m still convinced that it was a shell game and the the real money never existed. This should result in criminal prosecutions but don’t hold your breath.

  6. Robespierre Says:
    May 27th, 2010 at 10:14 am

    @BR: “Your time line is iincorrect ”

    Yes and no, The issue came up in March 11 at ZH (LEHMAN) after the investigation on the BK (so several months ago). At the time ZH indicated that other banks were most likely doing the same (They all denied BTW). So yes my comment was wrong about they reported the issue “as investigated” for the other banks when in reality they only suggested…And yes I do know that it is easier to suggest than to prove…

    ZH (March 11): “That this scam was going unsupervised (just who the hell were the counterparties?) for many years, and that many banks are likely using it right now to fool investors, regulators, rating agencies, and the idiots at the FRBNY (who certainly also know about this), is beyond criminal. Yet that nobody will go to jail for this is as certain as the market going up another 10% tomorrow. A full investigation has to be conducted immediately into whether existing Wall Street firms, and in particular those who use Ernst & Young as auditors, are currently abusing public confidence via such transactions. “

  7. WFTA Says:
    May 27th, 2010 at 10:29 am

    Can someone please explain to me why the use of “repos” is not considered an out-and-out crime?

  8. Robespierre Says:
    May 27th, 2010 at 10:45 am

    @WFTA Says:

    “Can someone please explain to me why the use of “repos” is not considered an out-and-out crime?”

    Boston University Law Professor Elizabeth Nowicki argues there was no reason for Lehman’s Repo 105 exchange alternative than to ‘cook its’ books.’
    http://irslawyertax.com/fmr-sec-lawyer-lehmans-repo-105-is-illegal.irs-tax

  9. Thursday links: avoiding anchoring Abnormal Returns Says:
    May 27th, 2010 at 1:05 pm

    [...] B of A and Citigroup so “no harm, no foul” on mischaracterized repos.  (WSJ, Big Picture) [...]

  10. mcnet Says:
    May 27th, 2010 at 9:23 pm

    How do you interpret the CITI graph?
    They were increasingly net lenders in the last few qtrs?

    Avg balances vs quarter end balances aside, does this chart demonstrate that CITI is on the other side of BOA (and others) Qtr end window dressing?

    It looks odd to me

  11. flenerman Says:
    May 27th, 2010 at 11:08 pm

    I’d say that at least two banks learned something from the Lehman 105 reporting and that BAC didn’t.

61 queries. 0.304 seconds.