Graphic: How “Repo 105″ worked
A look at “Repo 105,” a series of transactions that Lehman Brothers is alleged to have used to make its balance sheet appear stronger.
- Text: Dan Wilchins, llustration: Silvio DaSilva
Bad will
Most binges are followed by hangovers, and so the takeover boom earlier this decade is likely to translate into some hefty goodwill impairment charges for major European companies, as they mark down the value of assets bought when the party was in full swing.
This graph, lifted from a new report by Houlihan Lokey, shows the proportion of companies in each sector of the DJ Stoxx 600 index that have a book value of equity at least 10% above their market capitalisation. The bigger the dark blue line, the worse shape the sector is in – step forward autos, banks, insurers, other financial institutions, and real estate-companies.
Read the full Reuters story on the report here. And here’s an earlier HL release on U.S. goodwill impairment.
My gut feeling is that this looks like good old fraud, or breach of trust if you want, and not ‘smoke and mirrors’. The basic notions of good faith and proper disclosure are missing here.
I can already see Cuomo and his team filing charges.