Bernanke, Geithner to testify on Lehman next Tuesday

WASHINGTON (BestGrowthStock) – Federal Reserve Chairman Ben Bernanke and Treasury Secretary Timothy Geithner will testify before Congress on Tuesday on the 2008 collapse of Lehman Brothers at the peak of the financial crisis.

The two, along with Securities and Exchange Commission Chairman Mary Schapiro and former Lehman Chairman Richard Fuld, will appear before the U.S. House of Representatives Financial Services Committee starting at 11 a.m. (1500 GMT)

Lehman collapsed in September 2008 after efforts to find a suitor for the Wall Street bank failed, and there has been widespread speculation that letting it fail made the crisis worse.

Geithner was then president of the New York Federal Reserve Bank. Both he and Bernanke, along with former U.S. Treasury Secretary Henry Paulson, were closely involved in the effort to deal with Lehman and ultimately with the decision to let it fail.

Controversy has swirled around Lehman since its failure and continues to do so, including its use of accounting methods that apparently masked the depth of the problems it was experiencing before it failed.

A court-appointed examiner found last month that Lehman had used an accounting device called Repo 105 for the sole purpose of manipulating its books and helping hide that it had been insolvent for weeks before its collapse.

The Repo 105 transactions allowed Lehman to temporarily remove $50 billion of assets from its balance sheet in 2008.

Schapiro sent letters to chief financial officers of about two dozen big financial firms to see whether others were using similar accounting devices.

Regulators were already under scrutiny over why they failed to detect and limit reckless lending practices before the crisis and lawmakers are expected to grill them next week on the adequacy of supervision over financial reporting.

Investing Research

(Reporting by Glenn Somerville; Editing by Kenneth Barry)

Bernanke, Geithner to testify on Lehman next Tuesday