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Motley Fool Hidden Gems Investing

Motley Fool Money: 03.12.2010

Motley Fool Hidden Gems Investing

The Motley Fool

Investing, Business

4.33.1K Ratings

🗓️ 12 March 2010

⏱️ 39 minutes

🧾️ Download transcript

Summary

Is Lehman Brothers the new Enron? Will Cisco's new router technology connect with investors? Are the latest retail numbers really cause for celebration? On this week's Motley Fool Money Radio Show, we'll tackle those stories, talk about the latest numbers from American Eagle, IMAX, and McDonald's, and debate the relative merits of Lindsay Lohan's lawsuit.  We'll also share three stocks on our radar and talk bailouts and consumer protection with Congressional Oversight Panel Chair Elizabeth Warren. Learn more about your ad choices. Visit megaphone.fm/adchoices

Transcript

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0:00.0

Everybody needs money. That's why they call it money.

0:08.0

From full global headquarters, this is Motley Fool Money.

0:19.0

Welcome to the show. Thanks for being here. I'm your host, Chris Hell.

0:22.0

I'm enjoying my Motley Fool Senior Analyst, Seth Jason, James Early, and Shannon.

0:26.0

Guys, good to see you. Good to see you.

0:28.0

Chris, coming up, we'll talk with Elizabeth Warren, the woman keeping an eye on the money in the tar program.

0:33.0

We'll check out the latest numbers from IMAX, McDonald's, and American Eagle.

0:37.0

And we'll also look back at the 10-year anniversary of the tech bubble.

0:40.0

And as always, give you a look at the stocks that are on our radar.

0:44.0

But we begin with Lehman Brothers.

0:46.0

A court-appointed examiner's report is shedding some light on the sudden collapse of Lehman Brothers,

0:51.0

which turns out wasn't all that sudden.

0:54.0

According to the report, Lehman executives had been cooking the books for a while as they tried to deal with regulators, investors, and credit ratings agencies.

1:02.0

Guys, that includes using an accounting trick to temporarily remove $50 billion of troubled assets off the balance sheet.

1:11.0

James, this is stunning. $50 billion. Where do you hide that?

1:15.0

Chris, Lehman used what's called a repurchase agreement. And by itself, this is not a bad thing.

1:19.0

It's like, if I loan you my car over the weekend, you give me $20,000.

1:23.0

I give you $20,200 back at the end of the week and get my car back. I repurchase my car.

1:28.0

However, these were fancy repos, basically, that had very high collateral rates, 105%.

1:35.0

And Lehman was able to transfer these off its balance sheet into this separate entity.

1:40.0

So basically, hit this debt and did it at the end of the quarter to make itself look better.

1:45.0

Now, as bad as this sounds to us right now, I think what's really the worst thing is that the New York Fed apparently knew this all along,

...

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