Hightower Lowdown

Wall Street executives are howling that there's no need for tighter regulations on financial deals. We're not thieves, they huff, we're high-class professionals with auditors, directors, and shareholders helping us regulate ourselves--trust us!

Uh...no. Not now that we know how Lehman Brothers collapsed in 2008. The official word was that it was a victim of bad mortgages, but the recent bankruptcy report tells how top executives at the investment house were desperately "Enroning" its books. They spent nearly a year before Lehman's denouement manipulating their records to hide its rapidly deteriorating financial condition.

This "creative accounting" was done to deceive shareholders and Lehman's own board of directors. The CEO him-self certified the misleading figures, and the report cites him for being "at least grossly negligent." The bank's accounting firm, Ernst & Young, also knew of the manipulation--but raised no protest.

So this is why well-tailored, high-class professionals must be regulated --in a pinch, they cheat. But regulation must be truly independent, for guess who else knew about Lehman's financial shell game even as it was happening? The Federal Reserve Bank of New York, headed at the time by our present Treasury secretary, Tim Geithner. He sent his people to assess the bank's health, and they raised no alarm about the accounting gimmickry.

Wall Street and the Fed are two peas in a cozy pod, the so-called regulators and the bankers trusting each other, and so, undeserving of the public's trust.