Merrill Lynch accused of exposing Lehman Brothers ' own financial resources

Xinhua Beijing, March 19, according to the Financial Times reported that in 2008, a few months before the collapse of Lehman Brothers, the SEC and Fed officials have been warned by a major Wall Street competitor,　　Said Lehman was calculating a key indicator of financial health in an improper way. Former Merrill Lynch executives said they had disclosed to regulators the way Lehman measured liquidity conditions, for competitive reasons.　　The Merrill executives said they were under pressure from trading partners and investors to worry that Merrill was less liquid than Lehman. The warnings issued by Merrill Lynch last week were particularly significant after Andong Volux Anton Valukas, the Bankruptcy court investigator, issued a report on Lehman.　　Valukas found that Lehman had used bank financing instruments to whitewash its balance sheet before its collapse in September 2008. These findings raise questions about how well the federal regulators have mastered Lehman's accounting practices and when they did.　　According to Merrill Lynch executives, the SEC and the New York Fed received warnings about how Lehman's balance sheet was calculated in March 2008.　　Even on the fiercely competitive Wall Street, it is unusual for bankers to reflect such concerns to their rivals, the Fed's former and current officials say. Former Merrill Lynch executives said they contacted regulators after Lehman's estimates of liquidity conditions were released in the first quarter of 2008.　　Lehman, they added, boasted to its counterparties and investors that it was more robust than some of its rivals, including Merrill Lynch. The SEC declined to comment, pointing out that all the senior staff in the department that oversees Lehman had left. The New York Fed said the agency was unable to verify that its personnel had a dialogue with Merrill Lynch bankers.