The financial industry meltdown, and the need for reform as well as improved oversight & regulation, was laid out in even more stark contrast as the investigation in the collapse of Lehman Brothers brought more information to light with regard to their short-term lending practices.

From The New York Times, in an article by Michael J. de la Merced:

Now government regulators have what some lawyers call a road map for further inquiry into former Lehman executives like Richard S. Fuld Jr. and the auditing firm Ernst & Young.

Whether the Justice Department and the Securities and Exchange Commission will actually pursue their own legal actions is unclear. But legal experts said on Friday that the examiner, Anton R. Valukas, had provided plenty of material for civil regulatory action at the least with his findings of “materially misleading” accounting and “actionable balance sheet manipulation.”

The article goes on to describe an accounting practice referred to as Repo 105 that "helped the investment bank mask the true depths of its financial woes."

Repo? Shades of "Repo Man" re-cut with "Wall Street" with Tracey Walters & Emilio Estevez working for Michael Douglas in some weird Twilight-Zone like section of suburbia...and perhaps incorporating some elements from the new "Repo Men" movie starring Jude Law and Forest Whitaker. But these types of Repo Men -- the folks utilizing the Repo 105 tactic in order to create a façade of financial stability -- actually exist in the real world, and actually engaged in a practice that played a crucial role in masking the meltdown of a major financial institution.

From a WSJ article by Susanne Craig and Mike Spector (subscription req'd, but this bit is the intro):

Six weeks before it went bankrupt, Lehman Brothers Holdings Inc. was effectively out of securities that could be used as collateral to back the short-term loans it needed to survive. The bank's subsequent scramble to stay alive exposed the murky but crucial role that short-term lending, done in a corner of Wall Street known as the repo market, plays in the financial world.

If the repo market keeps getting associated with shady practices like this, it's gonna give the entire industry a bad name.

So, it's Saturday -- what's going on in your little corner of the market? This is an Open Thread.

In an extraordinarily important article today The Constitutional Moment Arrives, Stirling Newberry observes that

The key question is this: the American tax payers just bought the banking system. We are going to pay, with interest, upwards of three trillion dollars for it. A relative bargain actually. The question is what we are going to do with it now that we own it.

At the cost of your future, the U.S. financial system is being saved. For a half century, the United States has been unable to find a hundred billion or so a year to fund general healthcare, but now that financial powerhouses like Bear Stearns, Freddie Mac, Fannie Mae, and AIG are crumbling, the U.S. Treasury can magically procure trillions of dollars in promises without so much as a nit of resistance in either chamber of the U.S. Congress.

Mondays are traditionally rough, as the first day of the week after a two-day break, but today promises to be a real rough and tumble kind of day.

First up, while we catch up on Saturday news of Sarkozy limbering up for judo lessons from Putin, the thought occurs that there would be much less bloodshed in the world at large if global leaders had to engage directly in battle with each other instead of sending armies railing against each other and devastating cities and civilians in the process...

Once we've had a moment or two to chew the fat on that concept (and ponder how a McCain-Palin matchup would do on the world arena, knowing that a Cheney-Bush tag team would likely try to put a heavily armed Veep on a bicycle built for two, driven by a Prez known for careening wildly out of control), we can move on to the next battlefield: US and world financial markets...