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The Lehman Brothers Bankruptcy C: Managing the Balance Sheet Through the Use of Repo 105

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Abstract

The Lehman Brothers court-appointed bankruptcy examiner produced a 2,200-page report detailing possible claims that the estate might pursue. The most surprising revelation of the report was that during its last year Lehman had relied heavily on an unusual financing transaction--Repo 105. The examiner concluded that Lehman's aggressive use of Repo 105 transactions enabled it to remove up to $50 billion of assets from its balance sheet at quarter-end and to manipulate its leverage ratio so that it could report more favorable results. This case considers in-depth Lehman's questionable use of Repo 105 transactions and its impact.

Suggested Citation

  • Metrick, Andrew, 2019. "The Lehman Brothers Bankruptcy C: Managing the Balance Sheet Through the Use of Repo 105," Journal of Financial Crises, Yale Program on Financial Stability (YPFS), vol. 1(1), pages 80-99, March.
    • Handle: RePEc:ysm:ypfsfc:1144
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    File URL: https://elischolar.library.yale.edu/cgi/viewcontent.cgi?article=1002&context=journal-of-financial-crises
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    References listed on IDEAS

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    1. Bradbury, Michael E. & Schröder, Laura B., 2012. "The content of accounting standards: Principles versus rules," The British Accounting Review, Elsevier, vol. 44(1), pages 1-10.
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    More about this item

    Keywords

    Lehman Brothers; SFAS 140; Repo 105; repo; bankruptcy;
    All these keywords.

    JEL classification:

    • G01 - Financial Economics - - General - - - Financial Crises
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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