Lehman’s rapid growth saw net assets increase by 48 per cent, or almost $128bn, from the fourth quarter of 2006 through the first quarter of 2008. But the bulk of the assets, according to the report by court-appointed examiner Anton Valukasreleased on Thursday, were in illiquid assets that could not easily be sold. Such assets nearly doubled to $175bn in that same time frame
The repo issue is that this was used to disguise the extent of the leverage and the precarious financial position that the investment bank had engineered. If they were conducting this financial engineering, they were aware of the increase in risk that was being taken.