I've often wondered when the white collar prosecution part of the financial crisis would happen (it happened in Enron, after all, and a thousand prosecutions were launched by the S&L crisis of the 1980s), and when an accounting expert characterizes your use of an accounting rule "to create a materially misleading picture of the firm’s financial condition in late 2007 and 2008," you've got a criminal fraud problem, maybe, and plenty of civil issues, too.  Of course, some former Lehman bankers say that the use of Lehman by Repo 105 was mere window dressing - and they have a point; the real problem for Lehman and other insolvent financial institutions was the decision to keep exposure to the American housing market on their balance sheets.  I'm also wondering how long the statute of limitations is for this sort of thing.

So who should we believe re: materially misleading?  The bankers or the accounting expert?  I still expect prosecutions ... but then I'm biased, given that said expert - and the Congressional Oversight Panel - cited the Davidoff/Zaring paper on the financial crisis.

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