Lehman's Bizarro World: Former Execs 'Shrug' At $50B Accounting Trick, Fuld Says He's Vindicated

Welcome to the Bizarro World of former Lehman Brothers executives.

If you can believe it, some ex-Lehman executives are actually claiming that the accounting "gimmick" that hid $50 billion in assets as the company failed isn't really worth mentioning. (Stay with us on this one.)

At the New York Observer, Max Abelson has an absolute must-read piece ("The Repo Men's New Lehman Shrug") in which he quotes three former Lehman executives who are out to convince us that their now infamous "Repo 105" transactions were near standard operating procedure on Wall Street.

And, according to the New York Post, former Lehman CEO Dick Fuld actually feels vindicated by the Lehman bankruptcy examiner's report released last week -- which said that Fuld was "at least grossly negligent" in failing to discover the transactions.

So, if you're scoring at home, to ex-Lehman brass $50 billion is an insignificant amount of money to conceal and being referred to as grossly negligent is a relief. Got that? (Bear in mind that $50 billion is roughly half the annual cost of the Democrats' hotly-debated health care plan.)

The "Repo 105" deals -- which, the examiner found, improperly classified loans as revenue on Lehman's books -- were just too arcane for the layperson, according to one of Abelson's sources. Lehman execs were forced to move the deals through its London office to get them approved. "It's funny, for nonprofessionals, you can try to make it a smoking gun," the source said, "I'm like, whatever."

Here's another juicy bit from the NYO:

The idea, a year and a half after the biggest bankruptcy in American history began, is that criticism of the firm is the domain of unsophisticates. "When I read this, I giggle a little bit. Because $50 billion is a shitload of money, but in the grand scheme of things," said a third source, a former managing director in England--where the accounting gimmick, named Repo 105, was given a legal endorsement that it couldn't get here, "$50 billion is a drop in the ocean."

The NYO's choice quotes, Felix Salmon argues, are indicative of a larger cultural problem on Wall Street -- a problem, he says, that won't be addressed in the financial reform efforts. Here's Salmon:

"But it's important not to lose sight of the fact that what we're seeing here is a corporate failing to an even greater degree than it is an individual one, and that it infects investment banks generally, not just Lehman Brothers. These shops deliberately go out to hire psychopaths, and then they fire the ones who go soft, while promoting the most aggressive assholes, keeping a few smooth-talking client-relationship types on hand to preserve some semblance of a respectable public face.