BofA's Bogus Bottom Line
What's the real difference between Lehman Brothers' bogus Repo 105 transactions and
Bank of America's
(BAC - Get Report)
Easy. Lehman Brothers isn't around anymore to offer a lame defense of its shady off-balance sheet shenanigans.
Bank of America, or Bank of America/Merrill Lynch, or whatever you want to call the TARP-made monstrosity, disclosed details of six repurchase agreements, or repos, that it incorrectly classified as sales last Friday. The so-called mistakes, which the bank acknowledged in a letter filed Friday with the
Securities and Exchange Commission
, effectively hid billions of dollars of debt between 2007 and 2009.
The questionable transactions were called "dollar roll" trades because the bank's investing-banking unit transferred -- or rolled -- mortgage-backed securities to an unidentified trading partner and simultaneously agreed to repurchase similar securities from the partner soon afterward. The first such error occurred on March 31, 2007, and totaled $4.5 billion in securities. The largest misclassification was $10.7 billion on Sept. 30, 2008.
In other words, just like the now-defunct Lehman Brothers did with its ridiculous Repo 105 deals, Bank of America would play a game of Hide the Toxic Assets at the end of every quarter to make it look more attractive to regulators and Wall Street analysts.
"The transactions did not have a material impact on the bank's earnings or balance sheet," said a BofA company spokesman.
Not material? Give us a break! How about the tens of billions of bailout dollars you received? Were they of any consequence in keeping BofA from going under?
We thought so.
Dumb-o-meter score: 75 -- Lehman died for Wall Street's sins.