Holy shit, E&Y has some 'splainin to do.
DealBook has the entire 2,200 page report that recounts the final months of Lehman by Lehman's own bank examiner Anton R. Valukas. NYT tells us it includes accounting fraud, crackhead-like risk management, acknowledgment of fraud, and, uh, tales of getting strong-armed by Citigroup and JP Morgan:
According to the report, Lehman used what amounted to financial engineering to temporarily shuffle $50 billion of troubled assets off its books in the months before its collapse in September 2008 to conceal its dependence on leverage, or borrowed money. Senior Lehman executives, as well as the bank’s accountants at Ernst & Young, were aware of the moves, according to Mr. Valukas, the chairman of the law firm Jenner & Block and a former federal prosecutor, who filed the report in connection with Lehman’s bankruptcy case.
Christ, and I thought Fedgate was bad.
Update: Naked Capitalism is calling out the NY Fed:
Well, it is folks, as a newly-released examiner’s report by Anton Valukas in connection with the Lehman bankruptcy makes clear. The unraveling isn’t merely implicating Fuld and his recent succession of CFOs, or its accounting firm, Ernst & Young, as might be expected. It also emerges that the NY Fed, and thus Timothy Geithner, were at a minimum massively derelict in the performance of their duties, and may well be culpable in aiding and abetting Lehman in accounting fraud and Sarbox violations.
It's too early to call anything, hope you've got a safe bunker to hide out in while the smoke clears.