And their analysis is that Lehman Brothers were insolvent for months, if not years before they finally collapsed, and that the firm use unethical, and possibly illegal tricks to conceal the amount of their debt:

But the examiner, Anton R. Valukas, also for the first time, laid out what the report characterized as “materially misleading” accounting gimmicks that Lehman used to mask the perilous state of its finances. The bank’s bankruptcy, the largest in American history, shook the financial world. Fears that other banks might topple in a cascade of failures eventually led Washington to arrange a sweeping rescue for the nation’s financial system.

That sounds like fraud to me, and I think that it warrants a criminal investigation.

What is even more interesting is that the Federal Reserve Bank of New York was aware of the accounting activities, and that they appear to be in violation of regulations.

Yves Smith, reading the 2200 page report so that yiours’s truly does not have to, makes this clear, and makes it clear that regulators were complicit:

Well, it is folks, as a newly-released examiner’s report by Anton Valukas in connection with the Lehman bankruptcy makes clear. The unraveling isn’t merely implicating Fuld and his recent succession of CFOs, or its accounting firm, Ernst & Young, as might be expected. It also emerges that the NY Fed, and thus Timothy Geithner, were at a minimum massively derelict in the performance of their duties, and may well be culpable in aiding and abetting Lehman in accounting fraud and Sarbox violations.

…………

But here is the part of the report that discussed how the Fed aided and abetted Lehman misconduct:

[T]he Examiner questioned Lehman executives and other witnesses about Lehman’s financial health and reporting, a recurrent theme in their responses was that Lehman gave full and complete financial information to Government agencies, and that the Government never raised significant objections or directed that Lehman take any corrective action.

I would note that at the time of the Lehman collapse, and for some time before it, the President of the Federal Reserve Bank of New York was one Timothy Geithner.

I’m beginning to think that this is more than incompetence, I’m beginning to think that a criminal investigation should include our current Treasury Secretary.

Barack Obama, you need to fire Timothy Geithner. If the ‘Phants filibuster, then you recess appoint his successor.