Lehman Justice Isn’t Blind, It’s Unconscious (Jonathan Weil)

Feb. 11 (Bloomberg) -- It is so widely accepted that Lehman Brothers Holdings Inc.’s balance sheet was bogus that even former Treasury Secretary Hank Paulson can say it in his new memoir. And still, the government hasn’t found anyone who did anything wrong at the failed investment bank.

How could that be, 17 months after Lehman collapsed and sent the global credit crisis into overdrive? While Congress and the White House dither about reforming the U.S. financial system, the wheels of justice are grinding so slowly, if at all, that it seems there’s no appetite in Washington for holding Wall Street executives accountable for anything.

In his new book, “On the Brink,” Paulson doesn’t point fingers at specific Lehman executives for violating any rules. He displays amazing candor, though, in describing how Lehman’s asset values were a gross distortion of the truth. It doesn’t take much imagination to figure out they didn’t get that way all by themselves.

For instance, why couldn’t the Federal Reserve arrange a government-assisted bailout for Lehman in September 2008, as it had done for Bear Stearns Cos.? Paulson tells us that Tim Geithner, then head of the New York Fed, “made clear that the Fed could not lend against Lehman’s dubious assets.” Meanwhile, Paulson said Lehman’s chief executive officer, Dick Fuld, “was still clinging to his belief in the value of his assets, but he was alone there.”

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