What Did John Kasich Know?

A huge amount of information is coming out about John Kasich’s former employers at Lehman Brothers. A report, written by an examiner for the bank, lays out in stark detail some of the unethical practices the company used to prop up it’s image to investors.

This paragraph from Volume 3, Section 4 of the report details one of Lehman Brothers’ favorite schemes to dress up the books.

Lehman employed off‐balance sheet devices, known within Lehman as “Repo 105” and “Repo 108” transactions, to temporarily remove securities inventory from its balance sheet, usually for a period of seven to ten days, and to create a materially misleading picture of the firm’s financial condition in late 2007 and 2008. Repo 105 transactions were nearly identical to standard repurchase and resale (“repo”) transactions that Lehman (and other investment banks) used to secure short‐term financing, with a critical difference: Lehman accounted for Repo 105 transactions as “sales” as opposed to financing transactions based upon the overcollateralization or higher than normal haircut in a Repo 105 transaction. By recharacterizing the Repo 105 transaction as a “sale,” Lehman removed the inventory from its balance sheet.

In the second quarter of 2008, when Lehman was trying to reassure the public, the New York Times reports that these tactics were being used to “shed” $50 billion in debt from the books.

So far Kasich has been less than forthcoming about his time at Lehman Brothers. Wonder what he’s hiding?