Should Geithner and Bernanke Be in Jail?

I kept running into the story of Lehman Brothers during my morning research, and the more I learned, the more I asked myself this question.

On top of everything Lehman Brothers did before it collapsed in 2008, nearly toppling the financial system, it now seems that it was aggressively massaging its books. Of course, many colossal bankruptcies involve bad accounting. But a new report on the Lehman collapse, released last week and described in an article in Friday’s Times, would leave anyone dumbstruck by the firm’s audacity — and reminded of the crying need for adult supervision of Wall Street.

The 2,200-page report was written by Anton R. Valukas, a former federal prosecutor who was appointed by the Justice Department as an examiner for the Lehman bankruptcy case. According to the report, Lehman engaged in transactions that let it temporarily shift troubled assets off its books and in so doing, hide its reliance on borrowed money.

The maneuvers, which Mr. Valukas said were “materially misleading,” made the firm appear healthier than it was. He wrote that Richard S. Fuld Jr., Lehman’s former chief executive, was “at least grossly negligent,” and that Lehman executives engaged in “actionable balance sheet manipulation.”

At the time, one Lehman executive sent e-mail to a colleague describing the accounting ploys as “basically window dressing.”

Window dressing? Shortly before Lehman’s failure, $50 billion in troubled assets were shed from its balance sheet… [emphasis added]

Inserted from <NY Times>

OK, so far that’s pretty bland stuff: just the normal workings of corporate criminals polluting the financial sand-box created by years of GOP economic policy that Bill Clinton should have interrupted, but didn’t.  Then at Crooks and Liars, I discovered this Dylan Rattigan video with Elliot Spitzer:

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Geithner and Bernanke should have known. They had access to the records.  Geithner in particular did three separate stress tests on Lehman before they declared bankruptcy.  The company failed all three.  Geithner turned a blind eye and took no action.  Either he is so incompetent that he could not see what was directly under his nose, or he is so corrupt that he saw it clearly and turned a blind eye.  In either case, this is more than sufficient cause to remove him as Treasury Secretary.  Did he and Bernanke, along with Paulsen and Summers, collude to create a crisis designed to save the Banksters at our expense?  I cannot answer that.  If so, they all belong in jail.  We need those answers.

Why is this so important right now?  On Monday, Chris Dodd plans to reveal his Financial Reform bill.  I have held off reporting on it until the actual document is available for analysis, but I understand that it places far too much authority in the Federal Reserve and Treasury Secretary.  Based on current indications, neither can be trusted.