By now it has hit news that Lehman's buried $50 bil in debt in 07-08 off their balance sheet with Repo 150 transactions. While lawyers continue to look for angles and loophole in which to stick Lehman executives & EY for these misleading deals, Im wondering about the bigger problems with this regulatory structure.
Do the "rules" over "guidelines" philosphy encourage this type of malfeasance and misrepresentation? While it will be tough to prove LB broke any specific rules required to execute these Repos, wouldnt they certainly be toast under a guidelines system of good faith, full-disclosure, intention, and acting in the best interest of its stakeholders?
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