Comments on: How Big is Lehman’s Failure? Big!

By: Andie

Andie — Thu, 18 Sep 2008 14:15:27 +0000

“As long as it wasn’t the end of the quarter, I don’t think they would have to file anything before bankruptcy.”

Andie — Wed, 17 Sep 2008 16:09:40 +0000

I like your responses.

I just emailed my accting prof to get his take . . . so hold your breath!

Stanton — Tue, 16 Sep 2008 21:41:06 +0000

Andie: I'm not entirely sure I have a solid answer, but here's some random guessing.

Lehman had already been impairing the assets, which was part of their problem. They kept losing money on the assets which made it tougher to secure the financing they needed to continue as a bank.
Lehman will almost certainly say that the assets were fairly valued at the time of the bankruptcy. To say otherwise would indicate that they weren't following GAAP.
I think they were marking to market anyway (although I'm not sure). That's kind of ridiculous for exotic mortgage assets, but whatever. The assets should have been marked daily to market values.
After a bankruptcy, it's a new ballgame. The courts are in charge and dictate how to value things.

Andie — Tue, 16 Sep 2008 21:31:48 +0000

I’m still in baby accting here, buy why don’t they have to impair their assets on their b.s. before they declare bankruptcy?

Greg Stoll — Tue, 16 Sep 2008 19:23:40 +0000

Three-fourths of a war in Iraq!