Repo 105 Latest Accounting Trick By Large Brokers

The latest scathing report by an examiner from the bankrupcy court discloses a common but little known accounting trick called Repo 105 has been revealed to have been a major factor in the downfall of Lehman and may have contributed to the wide spread collapse of the financial system.

Analysts are now looking into whether this practice wes in fact more wide spread in other financial institutions and banks and may even still be in use today.

The practice known as repo 105 basically happened when assets were sold and then rebought after the reporting period had passed leading to a false picture of the companies assets and liabilities.

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In August of 2008 most americans felt relatively safe in their economic lives. Although rummblings had been heard in the financial community of troubles in the credit markets and credit default swaps very few people had any idea of the extent the problems penetrated into the financial system.

Over the past almost 2 years the US has stumbled along and required massive governmental intrusion and financing of our banking industry. Numerous reporters and authors have beeen reviewing the causes of the crisis and they have been blamed on everybody from Bernie Maddof to Dick Chaney. Today it finally appears the true culprets may be coming into view.

It now appears that a rather cryptic and relatively unknown accounting practice may have been the real instigator behind the crisis. This practice called repo 105 will become well known over the next few weeks to the general public.

The practice is basically an accounting trick where current inventory, in this case securities and moved off the book as a sale around the time of reporting to investors and banking officials. these are then bought back a few days later and the debt reappears on the balance sheet after the reporting period has passed. This pactice led to a false picture of the financial institutions credit worthiness.

The practice has just been brought to light and is believed to be in use throughout the financial community. The extent and penetration of this practice is unknown at present. This calls into question financial reports from many of the nations largest financial institutions. Just how wide spread this practice is will become obvious over the next few weeks.

Financial markets may well roil in the throughs of this latest revelation, especially if the practice is shown to be widespread. Keep your ears tuned over the next few weeks as Repo 105 become a familiar phrase.

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